SETTLEMENT AGREEMENT AND RELEASE
EXHIBIT
10.1
SETTLEMENT
AGREEMENT AND RELEASE
Settlement
Agreement and Release, dated August 12, 2008, effective as of July 25, 2008
(this "Agreement"), among Emerald Asset Management, Inc., a Delaware corporation
with an address at 0 Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (“Emerald”), Xxxx
Xxxxxxxx, an individual with an address at 0 Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
00000 (“Xxxxxxxx” and, together with Emerald, “Consultant”), New York Health
Care, Inc., a New York corporation with an address at 0000 XxXxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 (“New York Health Care”), The BioBalance Corporation, a
Delaware corporation with an address at 0000 XxXxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxx
00000 (“BioBalance” and, together with New York Health Care, the “Company”).
Emerald, Xxxxxxxx, BioBalance and New York Health Care are collectively referred
to as the “parties”.
1 RECITALS
A. The
Company and Consultant were signatories to a Settlement Agreement, dated as
of
March 1, 2006, as amended on April 17, 2006, a copy of which is annexed hereto
as Exhibit
A
(the
“2006 Settlement Agreement”).
B. On
August
21, 2006, the Company unilaterally rescinded the 2006 Settlement Agreement.
C. On
or
about April 24, 2008, Consultant delivered to the Company a notice demanding
that the Company perform its obligations under the Settlement
Agreement.
D. The
parties desire to resolve all disputes among them (collectively, the “Disputed
Matters”) on the terms and subject to the conditions set forth
herein.
In
consideration of the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
AGREEMENT:
1. Termination
of 2006 Settlement Agreement.
The
parties acknowledge and agree that the 2006 Settlement Agreement has been
terminated in all respects, and that no party has any further obligations of
any
nature whatsoever to any other party thereunder. In connection therewith, the
parties acknowledge and agree that the provisions of Sections 2, 3, 4, 5 and
6
of this Agreement have been complied with by the parties.
2. Settlement
Consideration.
In
consideration for the settlement of the Disputed Matters, including Consultant’s
agreement to terminate the 2006 Settlement Agreement, the Company has agreed
to
(a) make the Cash Payment (as defined below) to Consultant, (b) cause its
newly-formed indirectly wholly-owned subsidiary, BioBalance LLC, a Delaware
limited liability company (“BBAL LLC”), to enter into a membership interest
subscription agreement with Xxxxxxxx, or an entity of which Xxxxxxxx owns 100%
of the outstanding equity interests (the “Xxxxxxxx Member”), for membership
interests of BBAL LLC representing, immediately following the issuance thereof,
33-1/3% of the issued and outstanding membership interests of BBAL LLC on the
terms described below and (c) enter into a one-year consulting agreement with
Xxxxxxxx on the terms described below.
3. Cash
Payment.
Concurrently with the execution and delivery of this Agreement, in partial
consideration for the settlement of the Disputed Matters, the Company shall
deliver to Consultant a cash payment of Six Hundred Fifty Thousand Dollars
($650,000) (the “Cash Payment”).
4. Membership
Interest Subscription Agreement. On
or
prior to the date hereof, BioBalance has contributed its intellectual property
assets to BBAL LLC. Concurrently with the execution and delivery of this
Agreement, in partial consideration for the settlement of the Disputed Matters,
BBAL LLC and the Xxxxxxxx Member shall execute and deliver a membership interest
subscription agreement, in the form annexed hereto as Exhibit
B
(the
“Subscription Agreement”), pursuant to which BBAL LLC shall issue to Xxxxxxxx or
his assigns membership interests of BBAL LLC representing 33-1/3% of the issued
and outstanding membership interests of BBAL LLC.
5. Consulting
Agreement.
Concurrently with the execution and delivery of this Agreement, BioBalance
and
Xxxxxxxx will enter into a one-year consulting agreement, in the form annexed
hereto as Exhibit
C
(the
“Consulting Agreement”), pursuant to which Xxxxxxxx will serve as a consultant
to BioBalance at an annual base salary of $180,000, and will be entitled to
a
bonus contingent on an increase in the valuation of BioBalance determined in
accordance with the terms of the Consulting Agreement.
6. Funding
of BBAL LLC by New York Health Care.
As a
condition to entering into the Consulting Agreement, New York Health Care shall
have advanced to BBAL LLC not less than Two Million Dollars ($2,000,000), with
such funds to be allocated solely for use by BBAL LLC for the purposes of,
among
other things, (a) conducting further studies on Probactrix®, (b) start-up
production, stability testing and storage of product, (c) funding clinical
research organization and Mayo Clinic costs and (d) administrative and overhead
expenses directly related to the foregoing.
7. Release
of Claims Against the Company and its Affiliates.
(a)
Each
of Emerald and Xxxxxxxx, for themselves and on behalf of their respective
successors, assigns, agents, representatives, heirs and legal representatives
(collectively, “Xxxxxxxx Releasors”), hereby release and forever discharge New
York Health Care and BioBalance, and New York Health Care’s and BioBalance’s
respective affiliates, stockholders, directors, officers, employees, agents,
and
representatives and their respective successors and assigns (collectively,
“Company Releasees”) from any and all claims, demands, damages, debts, losses,
actions, or causes of action of any kind whatsoever, known or unknown, accrued
or to accrue, which any Xxxxxxxx Releasor could assert against any Company
Releasee with respect to any matter, cause or thing whatsoever from the
beginning of the world to the day of the date of this Agreement, including,
but
not limited to, claims arising from any Disputed Matter, irrespective of whether
such claims arise out of contract, tort, violation of laws or regulations or
otherwise (collectively, “Section 7 Claims”), other than Section 7 Claims
arising out a breach by the Company of this Agreement or the other agreements
entered into by the Company and its affiliates on the date hereof in connection
with this Agreement.
For
purposes of this Agreement, an “affiliate” of a person or entity means any other
person or entity controlling, controlled by, or under common control with,
such
person or entity.
(b)
Each
of Emerald and Xxxxxxxx represents and warrants that it is the current legal
and
beneficial owner of all Section 7 Claims released hereby and has not assigned,
pledged or contracted to assign or pledge any such Section 7 Claim to any other
person or entity. Each of Emerald and Xxxxxxxx shall indemnify, defend and
hold
harmless the Company Releasees from and against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities or damages
asserted against any Company Releasee by any third party in respect of any
Section 7 Claim assigned or pledged to such third party by Emerald xx
Xxxxxxxx.
(c)
The
foregoing release may be pleaded by the Company Releasees as the full and
complete defense to, and as a basis for an injunction against, any action,
suit
or other proceeding which may be instituted, prosecuted or attempted by Emerald
xx Xxxxxxxx in breach of this Section 7, and it is understood and agreed that,
in such event, Emerald and Xxxxxxxx shall be liable for reasonable attorneys’
fees and costs incurred by any Company Releasee in enforcing the provisions
hereof, in addition to any other damages that may be incurred by a Company
Releasee as a result of the breach of the terms hereof.
8. Release
of Claims Against Emerald and Xxxxxxxx.
(a)
Each
of New York Health Care and BioBalance, for themselves and on behalf of their
respective affiliates, successors, assigns, agents and representatives
(collectively, “Company Releasors”), hereby release and forever discharge the
Emerald and Xxxxxxxx and their respective agents and representatives and their
respective successors and assigns (collectively, “Xxxxxxxx Releasees”) from any
and all claims, demands, damages, debts, losses, actions, or causes of action
of
any kind whatsoever, known or unknown, accrued or to accrue, which any Company
Releasor could assert against any Xxxxxxxx Releasee with respect to any matter,
cause or thing whatsoever from the beginning of the world to the day of the
date
of this Agreement, including, but not limited to, claims arising from any
Disputed Matter, irrespective of whether such claims arise out of contract,
tort, violation of laws or regulations or otherwise (collectively, “Section 8
Claims”), other than Section 8 Claims arising out a breach by Emerald xx
Xxxxxxxx of this Agreement or the other agreements entered into by Emerald
xx
Xxxxxxxx or their respective affiliates on the date hereof in connection with
this Agreement.
(b)
New
York Health Care and BioBalance represent and warrant that they, and their
respective affiliates, are the current legal and beneficial owners of all
Section 8 Claims released hereby and have not assigned, pledged or contracted
to
assign or pledge any such Section 8 Claim to any other person or entity. Each
of
New York Health Care and BioBalance shall indemnify, defend and hold harmless
the Xxxxxxxx Releasees from and against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities or damages asserted
against any Xxxxxxxx Releasee by any third party in respect of any Section
8
Claim assigned or pledged to such third party by New York Health Care,
BioBalance or their affiliates, as the case may be.
2
(c)
The
foregoing release may be pleaded by the Xxxxxxxx Releasees as the full and
complete defense to, and as a basis for an injunction against, any action,
suit
or other proceeding which may be instituted, prosecuted or attempted by New
York
Health Care, BioBalance or their affiliates in breach of this Section 8, and
it
is understood and agreed that, in such event, New York Health Care or
BioBalance, as the case may be, shall be liable for reasonable attorneys’ fees
and costs incurred by any Xxxxxxxx Releasee in enforcing the provisions hereof,
in addition to any other damages that may be incurred by a Xxxxxxxx Releasee
as
a result of the breach of the terms hereof.
9. No
Admission of Liability. The
parties acknowledge and agree that nothing contained in this Agreement
constitutes an admission or acknowledgement by such party of any (a) violation
of any federal, state, or local law, regulation, order, rule or other
requirement of law; (b) breach of any contract or other agreement, actual or
implied, including, without limitation, the 2006 Settlement Agreement; (c)
commission of any tort; or (d) other civil wrong.
10. Notices.
All
notices, requests, demands and other communications required or permitted to
be
given hereunder shall be in writing and shall be deemed to have been given
(a)
when received, if delivered in person or by overnight courier, or
(b) five (5) business days following the mailing thereof, if mailed
by certified first class mail, postage prepaid, return receipt requested, in
any
such case as follows:
If
to
Emerald xx Xxxxxxxx, to:
Each
of
them at their respective addresses set forth in the introductory paragraph
hereto,
with
a
copy to:
Xxxxxx,
Xxxxxxxx & Xxxx
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
If
to New
York Health Care or BioBalance, to:
New
York
Health Care, Inc.
0000
XxXxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attention:
Xx. Xxxxx Xxxxxxx, Chief Executive Officer
with
a
copy to:
Xxxxx
Xxxxxx Xxxxxxxx & Xxxxxx P.C.
000
Xxxxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx Xxxxx, Esq.
or
at
such other address or addresses as any party may have advised the other in
the
manner provided in this Section.
11. Complete
Agreement.
This
Agreement, together with the agreements referenced herein, set forth the entire
agreement of the parties with respect to the subject matter hereof and supersede
all prior agreements, contracts, promises, representations, warranties,
statements, arrangements and understandings, if any, among the parties hereto
or
their representatives. No waiver, modification or amendment of any provision,
term or condition hereof shall be valid unless in writing and signed by the
party to be charged therewith, and any such waiver, modification or amendment
shall be valid only to the extent therein set forth.
12. Governing
Law; Jurisdiction.
The
validity, performance, construction and effect of this Agreement shall be
governed by the substantive laws of the State of New York, without regard to
the
provisions for choice of law thereunder. The parties (a) agree that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in a State or Federal Court in the City of
New
York, County of New York, (b) waive any objection which they may have now
or hereafter to the laying of the venue of any such suit, action or proceeding,
and (c) irrevocably submit to the jurisdiction of any such court in any
such suit, action, or proceeding.
3
13. Binding
Effect; Third Party Beneficiaries.
(a) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and assigns.
(b) The
parties acknowledge and agree that the Company Releasees and the Xxxxxxxx
Releasees who are not signatories hereto shall be deemed to be third party
beneficiaries of this Agreement.
15. Separability.
Any
provision of this Agreement which may be determined by a court of competent
authority to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or
render unenforceable such provision in any other jurisdiction.
16. Counterparts.
This
Agreement may be executed by facsimile or other electronic transmission and
in
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute a single agreement.
17. Captions.
The
captions appearing in this Agreement are inserted only as a matter of
convenience and for reference and shall in no way affect the interpretation
or
construction of this Agreement or any of the provisions hereof.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
|
By:
/s/Xxxxx Xxxxxxx
|
|
Name:
Xxxxx Xxxxxxx
|
|
Title:
Chief Executive Officer
|
|
THE
BIOBALANCE CORPORATION
|
|
By:
/s/Xxxxx Xxxxxxx
|
|
Name:
Xxxxx Xxxxxxx
|
|
Title:
Chief Executive Officer
|
|
EMERALD
ASSET MANAGEMENT INC.
|
|
By:
/s/Xxxx Xxxxxxxx
|
|
Name:
Xxxx Xxxxxxxx
|
|
Title:
President
|
|
/s/Xxxx
Xxxxxxxx
|
|
Xxxx
Xxxxxxxx
|
EXHIBIT
A
2006
SETTLEMENT AGREEMENT
EXHIBIT
B
MEMBERSHIP
INTEREST SUBSCRIPTION AGREEMENT
EXHIBIT
C
CONSULTING
AGREEMENT
4
