EXHIBIT 10.39
RELEASE AND SETTLEMENT AGREEMENT
THIS RELEASE and SETTLEMENT AGREEMENT (the "AGREEMENT") is made as of the ___day
of December, 2004 by and between Endocare, Inc. ("Endocare"), for itself and the
other Endocare Parties (as that term is defined below) and National Union Fire
Insurance Company of Pittsburgh, Pa. (the "Insurer"), for itself and the other
National Union Parties (as that term is defined below).
RECITALS
WHEREAS, the following consolidated class action has been brought against
Endocare, Xxxx Xxxxx, Xxxx X. Xxxxxxxxxx, and Xxxxx Xxxxxx (collectively the
"Endocare Individual Defendants"):
Xxxxxxx et al v. Endocare, et al, No. CV-02-8429-DT(CTx) filed in
the United States District Court, Central District of California,
Western Division (the "Action");
WHEREAS, the Insurer has issued Policy No. 000-00-00 (the "Policy")
providing certain coverage to Endocare, its Subsidiaries, the Endocare
Individual Defendants and others subject to the terms and conditions of the
Policy;
WHEREAS, the Plaintiffs, Endocare, and the Endocare Individual Defendants
have entered into a Stipulation of Settlement (the "Stipulation") providing for
the settlement (the "Settlement") of the Action and claims related thereto as
set forth in the Stipulation;
WHEREAS, Endocare and the Endocare Individual Defendants have asserted
claims under the Policy against the Insurer for payment and/or reimbursement of
Loss arising out of the Action and the Settlement;
WHEREAS, the Insurer has raised questions as to the extent to which the
Policy is applicable to the Action and the Settlement; and
WHEREAS, Endocare, the Endocare Individual Defendants and the Insurer are
desirous of achieving a resolution of such claims and questions existing among
Endocare, the Endocare Individual Defendants and the Insurer regarding the
claims for payment and/or reimbursement of Loss in connection with the Action,
the Stipulation and the Settlement.
AGREEMENT
NOW, THEREFORE, in consideration of the respective covenants,
undertakings, representations and conditions hereinafter set forth, the parties
hereto agree as follows:
1
1. Definitions.
Terms defined in the Policy are used herein with the same meaning
unless otherwise defined herein.
"Based upon" means "based upon," "attributable to," "arising out
of," "in connection with" or "in any way related to," with those
terms having ascribed to them the fullest meanings under the law.
"Claims" means any and all actions, causes of action, proceedings,
adjustments, executions, offsets, contracts, judgments, obligations,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, variances, covenants, trespasses, damages,
demands, agreements, promises, liabilities, controversies, costs,
expenses, attorney's fees and losses whatsoever, whether in law, in
admiralty or in equity and whether based on any federal law, state
law, common law right of action or otherwise, foreseen or
unforeseen, matured or unmatured, known or unknown, accrued or not
accrued.
"The National Union Parties" means the Insurer, its affiliates,
predecessors, successors and assigns, and the respective agents,
servants, attorneys, employees, officers, directors, shareholders
and representatives of the foregoing, and each of them.
"The Endocare Parties" means Endocare, the other entities insured
under the Policy, and their respective affiliates, predecessors,
successors and assigns, the Individual Defendants and the other
Insured Persons and the respective estates, heirs, agents, servants,
attorneys, employees, officers, directors, shareholders, and
representatives of the foregoing, and each of them.
2. Payments by the Insurer The Insurer agrees that it will, no later than
thirty (30) days after the Court has entered an Order granting preliminary
approval of the Settlement, pay the sum of $1,223,601.67 into an escrow account
maintained by Lerach Xxxxxxxx Xxxxx Xxxxxx Xxxxxx and Xxxxxxx, LLP. Endocare and
the Endocare Individual Defendants acknowledge the Insurer has already paid
$3,776,398.33 of Defense Costs incurred by Insureds in connection with the
Action and the Settlement pursuant to the terms and conditions of the Policy.
The aforementioned payments are in full satisfaction of the obligations of the
Insurer under the Policy.
3. Mutual Release. The Endocare Parties do forever release and absolutely
and forever discharge the National Union Parties, and the National Union Parties
do forever release and absolutely and forever discharge the Endocare Parties,
from (a) any and all Claims under the Policy and (b) any and all Claims under
any and all other policies issued by the National Union Parties to the Endocare
Parties, but only to the extent that such Claims under such other policies are
based upon (i) the Action, (ii) the Stipulation, or (iii) the Settlement. The
foregoing release and discharge shall include without limitation: any assertion
that, in connection with or in any way related to the Action, the Settlement or
the Stipulation, the Insurer breached any obligation under the Policy or any of
the National Union Parties breached any obligation under any other
2
policy of insurance issued by any of the National Union Parties for the benefit
of any of the Endocare Parties with respect to the Action, the Stipulation or
the Settlement; and any assertion by the Insurer of any right to reimbursement
of any amounts paid under the Policy. The Endocare Parties and the National
Union Parties covenant not to xxx based upon any matter released herein. Nothing
in this Agreement shall be deemed to release the National Union Parties or the
Endocare Parties from their obligations under this Agreement .
4. Unknown Claims. The Endocare Parties and the National Union Parties
acknowledge that (a) they may have sustained damages, expenses and losses in
connection with the subject matter of the Claims released hereunder which are
presently unknown or not suspected and that such damages, expenses and losses,
if any, may give rise to additional damages, expenses and losses in the future
which are not now anticipated by them and (b) that this Agreement and the
foregoing releases have been negotiated and agreed upon despite this realization
and, being fully advised, expressly waive any and all rights they may have under
any statute, including but not limited to Section 1542 of the California Civil
Code, or common law principle which would limit the effect of the foregoing
release to those Claims actually known or suspected to exist at the time of the
effectiveness of the foregoing Release. California Civil Code Section 1542
provides:
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.
It is the intention of the the Endocare Parties and the National Union Parties
that, notwithstanding the possibility that any of them or their counsel discover
or gain a more complete understanding of the facts, events or law which, if
presently known or fully understood, would have affected the foregoing release,
this Agreement shall be deemed to have fully, finally and forever settled any
and all claims encompassed by the release set forth herein, without regard to
the subsequent discovery or existence of different or additional facts, events
or law.
5. Representations and Warranties. The Endocare Parties and the National
Union Parties represent and warrant, that:
(a) they own the rights released herein and they have not assigned or
transferred or purported to assign or transfer any of such rights to
any other person or entity;
(b) they, through their counsel, have carefully read and understand the
contents of this Agreement;
(c) they have had the opportunity to consult with their own independent
counsel regarding the terms of this Agreement; and
(d) they enter into this Agreement without any inducement other than
that which is described herein.
3
6. No Admission of Liability. Neither the negotiation, nor the terms,
conditions and other provisions nor the performance of this Agreement shall be
(a) deemed or construed in any manner whatsoever to be an admission of liability
by any party for any purpose, or (b) used by any party for any purpose other
than the enforcement of the provisions hereof, provided, however, that nothing
in this sentence shall affect the validity or the releases and other agreements
set forth in this Agreement.
7. Costs and Expense of Enforcement. This Agreement is and may be pleaded
as a full and complete defense to, and is and may be used as the basis for an
injunction against prosecution, of any Claim which seeks recovery or relief
contrary to the terms of this Agreement. Should any party retain counsel for the
purpose of restraining, enjoining, or otherwise preventing the breach of, or
enforcing, this Agreement, including without limitation the commencement or
institution of any action or proceeding to enforce any provision of this
Agreement or to obtain (a) damages by reason of any alleged breach of any
provision hereof, (b) a declaration of the rights or obligations of any party or
(c) any other judicial remedy in connection therewith, the prevailing party
shall be entitled, in addition to such other relief as may be granted in such
action or proceeding, whether at trial or on appeal, to be reimbursed by the
other party for all reasonable out-of-pocket costs and expenses incurred as a
result thereof including without limitation reasonable outside attorneys' fees
and costs for services rendered to such prevailing party.
8. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the the Endocare Parties and the National Union Parties.
9. Miscellaneous. This Agreement shall be deemed to have been drafted
jointly by the parties; accordingly, any rule pertaining to the construction of
contracts to the effect that ambiguities are to be resolved against the drafting
party shall not apply to the interpretation of this Agreement or of any
modifications of or amendments to this Agreement. The paragraph headings
contained in this Agreement are for convenience of reference only and shall not
affect the interpretation or construction of this Agreement. No failure or delay
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. All prior understandings and agreements between the parties relating
to the subject matter hereof, whether written or oral, are merged in this
Agreement, which alone fully and completely expresses their entire agreement.
This Agreement may not be modified, changed, or amended orally. This Agreement
may be executed in multiple counterparts, each of which, when so executed and
delivered, shall be an original but such counterparts shall together constitute
one and the same instrument and agreement. The respective obligations of the
parties hereto are mutually reciprocal, interdependent and not subject to
severability.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ENDOCARE, INC
By:/s/ Xxxxxxx Xxxxx
----------------------
President
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA.
By:/s/ Xxxxxx Xxxxxxxxxx
----------------------
Xxxxxx Xxxxxxxxxx A.V.P.
5
