Exhibit 10.1
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT dated as of July 2, 2001, by and among Return
Assured, Inc. ("Return"), and Xxx X. Xxxxx ("Xxxxx").
WHEREAS, Hertz has commenced a law suit (the "Law Suit") against Return
by motion for summary judgment in the Supreme Court of New York (the "Court"),
Index Number 2602416 seeking the collection of the principal plus interest on
Return's $290,000 Note of October 16th, 2000 (the "Note") payable to the order
of Hertz; and
WHEREAS, the argument on the motion has been scheduled by the Court for
September 5, 2001; and
WHEREAS, parties have heretofore agreed to settle this matter on the
terms and conditions hereinafter set forth
NOW THEREFORE, it is agreed as follows:
1. Acknowledgment of Debt. Return acknowledges its debt to Hertz on the
Note $200,000 representing the principal of the Note (after deduction of $90,000
paid in connection with the vacation of the premises of 00 Xxxxxx Xxxxxx) plus
$10,000 representing interest at the rate of 10% per annum from October 16, 2000
to April 17, 2001, its maturity date, plus interest from April 17, 2001 to the
date of payment at the rate of 21% per annum (collectively the "Settlement
Sum").
2. Dismissal of Law Suit. The law suit shall be dismissed with
prejudice and counsel for the parties have executed a stipulation to this effect
for filing with the Court.
3. Payment of Debt. Return agrees to pay Hertz the Settlement Sum by
delivering to him a certified or cashier's check in that amount on or before the
close of business on October 8, 2001 (the "Closing Date").
4. Pledge of Hergo Stock. Return has agreed to secure the Settlement
Sum by pledging and delivering to the Escrow Agent as hereinafter provided, 200
shares of the Common Stock of Hergo Ergonomics Support Systems, Inc., its wholly
owned subsidiary ("Hergo"), representing all the issued and outstanding Hergo
Stock.
5. Return's Representations and Warrants. Return represents and
warrants that it has the authority to enter into and to perform this Settlement
Agreement, that the 200 shares of Hergo Common Stock which it is delivering to
the Escrow Agent, represents all the issued and outstanding stock of Hergo and
that Hertz upon acquiring the title to the Hergo stock, pursuant to this
Agreement, will own the stock, free and clear of any claims or encumbrances
whatsoever. This representation is based on the assumption that Hertz Technology
Group, Inc. owned all the outstanding shares of Hergo consisting of 200 shares
at the time of its merger with Return under the Agreement and Plan of Merger
made as of July 13, 2000.
6. Return's Covenant. Return covenants that:
(a) it will not suffer or take any action which will impair
the effectiveness and validity of this agreement or the right
of Hertz to acquire full and unfettered title to the
outstanding stock of Hergo pursuant to the terms of this
Agreement and that it will not issue any additional shares or
rights to acquire any additional shares of Hergo stock.
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(b) it will from the date hereof through and including the
date the Hergo Stock is distributed by the Escrow Agent under
either 8(a) or (b) notify Hertz and the Escrow Agent
immediately if any claim has been asserted by any stockholder
or creditor of Return or by any other party making a claim
directly or indirectly challenging the validity of the
collateral security arrangement provided herein or the right
of Hertz upon assuming possession of the Hergo Stock under
Section 8(a) to own title to all the outstanding stock of
Hergo free and clear of any encumbrances, liens or assessments
with a description of any such claims (the "Return
Notification")
7. Escrow Documents. To give effect to the understanding of the
parties, Return and/or Hertz has delivered the following documents (the "Escrow
Documents") to Morse, Zelnick, Rose & Lander, LLP (the "Escrow Agent") who has
agreed to act as escrow agent under the terms and conditions set forth herein:
(a) A duly executed affidavit for confession of judgment (the
"Confession of Judgment") by Return in the amount of $210,000
plus interest at 21% per annum from April 17, 2001 to the date
of payment;
(b) Certificates for 200 shares of Common Stock by Hergo,
together with duly executed Stock Powers endorsed in blank
("the Hergo Stock");
(c) General release of Hertz by Return (the "Return Release");
and
(d) General release of Return by Hertz (the "Hertz Release).
8. Disposition of Escrow Documents. The Escrow Agent shall dispose of
the documents held in escrow as follows:
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(a) If the Settlement Sum is received by Hertz on or before
the Closing Date, the Escrow Agent shall return the Hergo
Stock and the Confession of Judgment to Return and shall
deliver the Return Release to Hertz and the Hertz Release to
Return;
(b) If the Settlement Sum is not received by Hertz on or
before the Closing Date and Hertz so notifies the Escrow
Agent, with copy to Return, (the "Default Notice"):
(i) the Escrow Agent shall within five (5) business
days after the receipt of the Default Notice deliver
the Hergo Stock to Hertz and, if no Return
Notification, as defined in Section 6(b) (or a notice
by Hertz that a claim of the type described in
Section 6(b) has been asserted directly against him),
shall have been received by the Escrow Agent, or if
not so received and Hertz does not make the election
in Section 8(b)
(ii) below, the Escrow Agent shall also deliver the
Return Release to Hertz and shall deliver the
Confession of Judgment and Hertz Release to Return.
Return and Hertz acknowledge that the Hergo Stock
delivered to Hertz under this subsection shall be
taken by Hertz in full and complete satisfaction of
the Settlement Sum and any and all obligations
covered by the Hertz Release; or (ii) if a Return
Notification, as defined in Section 6(b), (or a
notice by Hertz that a claim of the type described in
Section 6(b) has been asserted directly against him)
is received by the Escrow Agent prior to the return
of the Hergo Stock, under Section 8(b) and Hertz by
notice to Return and the Escrow Agent elects to
retain the Confession of Judgment and to take
possession of the Hergo Stock not in satisfaction of
Return's obligation but
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as collateral security for the payment of the
Confession of Judgment, the Escrow Agent shall also
deliver to Hertz the Confession of Judgment and in
this case destroy the Hertz Release and the Return
Release. The Hergo Stock when delivered to Hertz
shall be held by him as a Secured Party, as defined
under the New York Uniform Commercial Code, securing
the payment of the Confession of Judgment.
9. General Terms and Standards Regarding the Escrow Agent.
Notwithstanding any terms of this Agreement to the contrary, each term of this
Agreement, including without limitation each of the stated duties and
responsibilities of the Escrow Agent set forth herein, shall be subject to the
following terms and conditions:
(a) The duties, responsibilities and obligations of the Escrow
Agent shall be limited to those expressly set forth in this
Agreement (and the duty to exercise reasonable care in the
physical safekeeping of the Escrow Documents), and no implied
duties, responsibilities or obligations shall be read into
this Agreement against the Escrow Agent. Without limiting the
generality of the foregoing, the Escrow Agent shall have no
duty to take action to preserve or exercise rights in any
property held by it hereunder (including without limitation
against prior parties or otherwise).
(b) The Escrow Agent shall not be subject to, bound by,
charged with notice of or be required to comply with or
interpret any agreement or document between or among the
parties (whether or not reference to any such other agreement
or documents expressed herein) other than this Agreement.
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(c) The Escrow Agent shall in no instance be under any duty to
give any property held by it hereunder any greater degree of
care than it gives its own similar property.
(d) The Escrow Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any written notice,
instruction, statement, request, waiver, order, judgment,
certification, consent, receipt or other paper or document
furnished to it (not only as to genuineness, but also as to
its due execution and validity, the genuineness of signatures
appearing thereon and as to the truth and accuracy of any
information therein contained), which it in good faith
believes to be genuine and signed or presented by the proper
person.
(e) Neither the Escrow Agent nor any of its partners or
employees shall be liable to anyone for any error of judgment,
or for any act done or step taken or omitted to be taken by it
or any of its partners or employees, or for any mistake of
fact or law, or for anything which it, or any of its partners
or employees, may do or refrain from doing in connection with
or in the administration of this Agreement, unless and except,
to the extent the same constitutes gross negligence, or
willful misconduct on the part of the Escrow Agent. In no
event shall the Escrow Agent be liable for any indirect,
punitive, special or consequential damages.
(f) The Escrow Agent may consult with, and obtain advice from,
legal counsel with respect to any question as to any of the
provisions hereof or its duties hereunder, or any matter
relating hereto, and the opinion of such counsel shall be full
and complete authorization and protection in respect of any
action reasonably taken, suffered or omitted by the Escrow
Agent in good faith in accordance with the opinion and
directions of such counsel.
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(g) The Escrow Agent shall not be deemed to have notice of any
fact, claim or demand with respect hereto unless actually
known by a partner charged with responsibility for
administering this Agreement or unless in writing received by
the Escrow Agent and making specific reference to this
Agreement.
(h) No provision of this Agreement shall require the Escrow
Agent to expend or risk its own funds, or to take any legal or
other action hereunder which might in its judgment involve it
in, or require it to incur in connection with the performance
of its duties hereunder, any expense or any financial
liability unless it shall be furnished with indemnification
acceptable to it.
(i) Any permissive right of the Escrow Agent to take any
action hereunder shall not be construed as duty.
(j) All indemnifications contained in this Agreement shall
survive the resignation or removal of the Escrow Agent, and
shall survive the termination of this Agreement.
(k) In no event shall the Escrow Agent have any liability for
any failure or inability of any of the parties to perform or
observe its duties under the Agreement, or by reason of a
breach of this Agreement by either of the parties. In no event
shall the Escrow Agent be obligated to take any action against
either of the Parties to compel performance hereunder.
(l) The Escrow Agent shall in no instance be obligated to
commence, prosecute or defend any legal proceedings in
connection herewith. The Escrow Agent shall be authorized and
entitled, however, in any instance to commence, prosecute or
defend any legal proceedings in connection herewith, including
without limitation any
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proceeding it may deem necessary to resolve any matter or
dispute, to obtain a necessary declaration of rights, or to
appoint a successor upon resignation (and after failure by the
Parties to appoint a successor, as provided in Section 7).
(m) In the event of any ambiguity or uncertainty under this
Agreement, or in any notice, instruction or other
communication received by the Escrow Agent hereunder, the
Escrow Agent may, in its reasonable discretion, refrain from
taking action, and may retain any of the documents held in
escrow, until and unless it receives written instruction
signed by all parties, or a decision by a court of competent
jurisdiction which eliminates such uncertainty or ambiguity.
(n) If at any time the Escrow Agent is served with any
judicial or administrative order, judgment, decree, writ or
other form of judicial administrative process which in any way
relates to or affects the Escrow Documents (including but not
limited to orders of attachment or garnishment or other forms
of levies or injunctions or stays relating to the Escrow
Document), the Escrow Agent is authorized to comply therewith
in any manner as it or its legal counsel reasonably deems
appropriate; and if the Escrow Agent complies with any such
judicial or administrative order, judgment, decree, writ or
other form of judicial or administrative process, the Escrow
Agent shall not be liable to any of the parties hereto or to
any other person or entity notwithstanding that though such
order, judgment, decree, writ or process may be subsequently
modified, annulled, set aside, vacated, found to have been
without proper jurisdiction, or otherwise determined to have
been without legal force or effect.
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10. Indemnification. Each of Hertz and the Return, jointly and
severally, hereby covenants and agrees to indemnify the Escrow Agent for, and to
defend and hold harmless the Escrow Agent from and against, any and every loss,
liability, damage, claim, cost and expense of any nature incurred or suffered by
the Escrow Agent and arising out of or in connection with this Agreement or the
administration of this Agreement or the performance or observance by the Escrow
Agent of its responsibilities or services under this Agreement (including but
not limited to attorneys fees and other costs and expenses of defending or
preparing to defend against any claim or liability or of advising the Escrow
Agent as to its duties hereunder), unless and except to the extent such loss,
liability, damage, cost or expense shall be caused by the Escrow Agent's own
willful misconduct, bad faith or gross negligence.
11. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered on the
first business day after it is sent (as evidenced by its postmark) by registered
or certified mail, return receipt requested, postage prepaid, or on the first
business, day after it is sent (as evidenced by the courier's receipt) via a
reputable overnight courier service, in each case to the intended recipient as
set forth below:
If to Return Assured: Xxxx Xxxxx, President
Return Assured, Inc.
000 Xxxx Xxxxxxx
Xxxxx 0000
Xxxxxxxxx, XX X0X 0X0
Xxxxxx
With Copy to: Xxxxxx Gottbetter & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
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If to Hertz: Xxx X. Xxxxx
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, X.X. 00000
With copy to: Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
If to Escrow Agent: Morse, Zelnick, Rose & Lander
000 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Any party may give any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy, but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the party for whom it is
intended.
Any party may change the address to which notices, requests, demands,
claims and other communications hereunder are to be delivered by giving the
other parties notice in the manner herein set forth. Copies of any notice,
request, demand, claim or other communication hereunder by personal delivery or
telecopy given to the Escrow Agent by either party, shall be delivered to the
other party as soon thereafter as practicable.
13. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Agreement, not less than 60 days
prior to the date when such resignation shall take effect. Hertz may appoint a
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successor Escrow Agent with the consent of Return, which shall not be
unreasonably withheld. If, within such notice period, Hertz provides to the
Escrow Agent written instructions with respect to the appointment of a successor
Escrow Agent and directions for the transfer of the Escrow Documents then held
by the Escrow Agent to such successor, the Escrow Agent shall act in accordance
with such instructions and promptly transfer the Escrow Property to such
designated successor. If no successor is so appointed, the Escrow Agent may
apply to a court of competent jurisdiction for such appointment.
14. General.
(a) Governing Law, Assigns. This Agreement shall be governed
by and construed in accordance with the internal laws of the
State of New York of the United States without regard to
conflict-of-law principles and shall be binding upon, and
inure to the benefit of, the parties hereto and their
respective heirs, successors and assigns.
(b) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
(c) Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the
subject matter of this Agreement and supersedes all prior
agreements or understandings, written or oral, between the
parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or
of any breach of any provision of this Escrow Agreement shall
be effective unless in writing. No
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waiver by any party of any such condition or breach, in any
one instance, shall be deemed to be a further or continuing
waiver of any such condition or breach or a waiver of any
other condition or breach of any other provision contained
herein.
(e) Amendment. This Agreement may be amended only with the
written consent of the parties and the Escrow Agent.
(f) Cooperation. The parties hereto shall cooperate with each
other in the matters covered by this Agreement and shall
execute and exchange such documents as may be necessary or
desirable to give effect to transactions contemplated
hereunder.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
/s/ Xxx X. Xxxxx
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XXX X. XXXXX
RETURN ASSURED, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------
Escrow Terms Agreed to and Accepted:
Morse, Zelnick, Rose & Lander, LLP, Escrow Agent
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
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