Exhibit 10.17
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
SETTLEMENT AGREEMENT
This Settlement Agreement (this "AGREEMENT") is entered into as of this
14th day of August 2002, by and between Autodesk, Inc., a corporation organized
under the laws of the State of Delaware ("AUTODESK"), and Avatech Solutions,
Inc. and Technical Learningware Company, Inc. (collectively hereunder
"AVATECH"). Autodesk and Avatech are referred to herein as the "PARTIES" or
individually as the "PARTY." This Agreement sets forth the terms under which
Autodesk is prepared to accept a discounted payoff of all of the obligations of
Avatech to Autodesk under the Loan Agreement dated January 25, 1999 by and
between Autodesk and Avatech, together with the Secured Promissory Note and the
Security Agreement of the same date attached thereto, all as amended through and
as of the date hereof (the "LOAN AGREEMENT"). This Agreement shall be effective
on the date it is fully executed, which date shall be the date set forth above
and is referred to hereinafter as the "EFFECTIVE DATE."
1. DISCOUNTED PAYOFF. Subject to and effective upon due performance by
Avatech of each of the following:
(a) On the Effective Date, Avatech shall pay to Autodesk the total
sum of One Million Dollars exactly ($1,000,000.00) in readily available funds
(the "DISCOUNTED PAYOFF AMOUNT").
(b) Immediately upon execution of this Agreement by Autodesk and
prior to countersignature by Avatech, Avatech shall authorize payment to
Autodesk of the Discounted Payoff Amount by wire transfer pursuant to the
instructions set forth in Paragraph 2 below, Avatech's signatures below
representing verification that wire transfer instructions have been given to
Avatech's bank.
(clauses 1(a) and (b) being collectively referred to herein as the
"CONDITIONS");
then, upon full satisfaction of the Conditions, all of the outstanding debts,
liabilities and obligations owing by Avatech to Autodesk under the Loan
Agreement shall be, and be deemed, satisfied in full, and Avatech shall be
deemed released from all liability thereunder; provided that:
(A) Avatech shall remain obligated to Autodesk with respect to
any other obligations or liabilities of Avatech to Autodesk,
including trade indebtedness and any other obligations arising
outside the scope of the Loan Agreement.
(B) At least five days prior to the release by Avatech to the
public of any oral or written communication in which Autodesk is
named, except such references as occur in the normal course of
business, Avatech shall provide Autodesk with the text of such
public disclosure and, consistent with Avatech's requirements
under applicable law, Autodesk shall be permitted to review and
approve any disclosures of non-public information pertaining to
Autodesk or its business.
(C) At least five days prior to any meeting of the board of
directors of Avatech, or such shorter actual notice period as may
be given to the members of the board of directors under
applicable law, Autodesk shall be given notice of such meeting,
together with an agenda and such additional documentation as may
be provided to the members of the
[****************] Portions of this exhibit have been omitted and filed
separately with the Commission pursuant to a request for confidential treatment
under Rule 406.
board of Avatech, with the exception of documentation relating
directly to product pricing or to Avatech's business relationship
with Autodesk, and a designated representative of Autodesk shall
be permitted to attend meetings of the board upon prior notice to
Avatech; provided, however, it is understood that such
representative would not participate in any session pertaining
directly to product pricing or to Avatech's business relationship
with Autodesk or where the attorney-client privilege could be
compromised.
(D) In the event Avatech is not required to release quarterly and
annual financial information to the public under the Securities
Exchange Act of 1934, as amended (the "ACT"), Avatech agrees to
provide an income statement, cash flow statement and balance
sheet, together with footnotes if available, to Autodesk within
the same time frame such financial information would be required
to be filed with the Securities and Exchange Commission were
Avatech subject to the Act.
(E) Any commissions claimed by Avatech under Section 3.3(a) of
the Autodesk Authorized Channel Partner Agreement and the Major
Account Guide shall be subject to prior review and acceptance by
Autodesk.
(the obligations described in clauses (A), (B), (C), (D) and (E) above being
hereinafter referred to as the "SURVIVING OBLIGATIONS"). Surviving Obligations
(C), (D) and (E) shall terminate on the earlier to occur of (i) the date upon
which Avatech ceases to act as a reseller of Autodesk's products, but only if
Avatech no longer owes any obligations, including trade indebtedness, to
Autodesk, or (ii) August 14, 2006.
2. TRANSFER OF FUNDS. The Discounted Payoff Amount shall be made by wire
transfer in immediately available funds to the following account:
Bank Name: Citibank, N.A.
Account Name: Autodesk, Inc.
Account Number: [****************]
Routing Number: [****************]
3. RELEASES
(a) "CLAIMS" are, and the term is defined to mean, all actions,
causes of action, demands, damages, debts, obligations, liabilities, accounts,
costs, expenses, injuries, damages, liens or claims, whether known or unknown,
contingent or liquidated, asserted or unasserted, suspected or unsuspected.
(b) "RELEASED CLAIMS" are Claims of whatever character, whether known
or unknown, contingent or liquidated, asserted or unasserted, suspected or
unsuspected, in any way related to, connected with or arising out of the facts
and circumstances related to the Loan Agreement. "Released Claims" do not
include the duties or obligations of any Party under this Agreement or any other
agreements between the parties, except for the Loan Agreement.
(c) A releasor's or releasee's "RELATED PERSONS" are, and the term is
defined to mean, its past and present affiliates, subsidiaries, divisions,
predecessors, successors, assigns and its or their current or former partners,
principals, officers, directors, shareholders, owners, members, agents,
employees, trustees, attorneys, representatives, insurers, assigns, any other
current or former persons who managed or directed its or any of their respective
affairs
[****************] Portions of this exhibit have been omitted and filed
separately with the Commission pursuant to a request for confidential treatment
under Rule 406.
or acted on its or any of their respective behalves or can claim by or through
it or them, and all predecessors, successors and assigns of it or any of them.
(d) Release of Autodesk by Avatech: As an integral part of the
consideration given for the promises contained herein, Avatech, on behalf of
itself and its Related Persons, does hereby absolutely and forever release and
discharge Autodesk and its Related Persons, jointly and individually, from any
and all Released Claims.
(e) Release of Avatech by Autodesk: As an integral part of the
consideration given for the promises contained herein, Autodesk, on behalf of
itself and its Related Persons, does hereby absolutely and forever release and
discharge Avatech and its Related Persons, jointly and individually, from any
and all Released Claims.
(f) General Releases. Each of Avatech and Autodesk, on behalf of
themselves and their respective Related Persons,
(1) Understand and agree that this Agreement extends to all
claims of any nature and kind, known or unknown, suspected or
unsuspected, that are the subject of their respective releases,
and in that regard acknowledge that they are familiar with and
understand 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.
(2) Hereby waive and relinquish every right or benefit which they
may have under: Section 1542 of the Civil Code of the State of
California; and every right or benefit that they may have under
any similar law, statute, rule, or regulation of any jurisdiction
that may apply to this Agreement for any purpose, including its
enforcement.
(g) Authority to Release: Avatech warrants and represents that it has
the power and authority to release the Released Claims, and that it has not
heretofore assigned or transferred or purported to assign or transfer to any
third party any Released Claim.
(h) Authority to Release: Autodesk warrants and represents that it
has the power and authority to release the Released Claims, and that it has not
heretofore assigned or transferred or purported to assign or transfer to any
third party any Released Claim.
4. CONFIDENTIALITY. Each Party agrees not to disclose this Agreement or
the terms hereof to any third party without the prior written consent of the
other, except as required by applicable law. If required to be filed under the
Securities Act of 1933, as amended, or the Act, the filer agrees to request
confidentially from the Securities and Exchange Commission with respect to key
provisions.
5. INDEPENDENT REVIEW. Each Party acknowledges that it has had an
adequate opportunity to make whatever investigation or inquiry it deems
necessary or desirable in connection with the release contained in paragraph 3.
This Agreement is made in good faith under applicable law and is fair and
reasonable.
[****************] Portions of this exhibit have been omitted and filed
separately with the Commission pursuant to a request for confidential treatment
under Rule 406.
6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
the understanding concerning the subject matter hereof between the Parties and
supersedes and replaces all prior negotiations, proposed agreements and
agreements, written and oral, which are null, void and of no effect whatsoever.
The Parties acknowledge that no other party hereto nor any agent or attorney of
any such party has made any promise, representation or warranty whatever,
express or implied, not contained in this Agreement to induce them to execute
this Agreement. None of the parties to this Agreement or their counsel shall be
deemed the drafter of this Agreement for purposes of construing its provisions.
The language in all parts of this Agreement shall be interpreted according to
its fair meaning and, accordingly and specifically, shall not be interpreted
strictly for or against any Party or any of the persons released in this
Agreement. Each Party shall bear its own attorneys' fees and costs incurred in
connection with the negotiation and execution of this Agreement. This Agreement
can only be modified by a written agreement executed by the Parties.
7. CHOICE OF LAW. This Agreement shall in all aspects be interpreted,
enforced and governed in accordance with the laws of the State of California
without reference to its conflicts-of-law law, except to the extent that federal
law, including but not limited to the United States Bankruptcy Code, applies.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective insurers, heirs, representatives,
successors and assigns. If any provision shall be deemed invalid due to its
scope or breadth, such provision shall be deemed valid to the extent permitted
by law.
9. EXECUTION. By executing this Agreement, the Parties hereby indicate
their agreement to all of the foregoing. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
thereof.
AUTODESK, INC.
By: /s/ Xxxxxx X. Xxxxxxxx Date: 8/14/02
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Name: Xxxxxx X. Xxxxxxxx
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Title: SVP & General Counsel
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AVATECH SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxxxx Date: 8/14/02
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Name: Xxxxx X. Xxxxxx
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Title: CEO
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TECHNICAL LEARNINGWARE
COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxx Date: 8/14/02
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Name: Xxxxx X. Xxxxxx
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Title: President
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[****************] Portions of this exhibit have been omitted and filed
separately with the Commission pursuant to a request for confidential treatment
under Rule 406.
