Exhibit 4.38
SETTLEMENT AGREEMENT AND
MUTUAL RELEASE OF CLAIMS
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS ("Agreement") is
executed this 15th day of June, 1999, by and between Imaging Technologies
Corporation, a Delaware corporation, its subsidiaries, related entities, or
business concerns, past or present, including Color Solutions, Inc.,
predecessors, successors, officers, agents, employees and assigns and each of
them (hereinafter collectively called the "Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇.
▇▇▇▇▇▇").
The purpose of this Agreement is to resolve completely and mutually
release each and every claim for relief and cause of actions which Mr. French
and the Company has or may have against each other and all persons and entities
being released herein. These include, but are not limited to, all claims arising
out of or related to Mr. French's employment with the Company and the Agreement
and Plan or Merger and Plan of Reorganization, dated November 30, 1997, between
the Company and Color Solutions, Inc., a California corporation, ("Merger
Agreement").
This Agreement is made for good and valuable consideration which but
for this settlement Mr. French is not otherwise entitled to receive certain
consideration. That the parties now desire to enter into a binding agreement
regarding their future relationship and to settle and compromise, once and
forever, all of the disputes and controversies which now exist or may in the
future arise from the employment relationship and termination thereof.
WHEREFORE, the parties agree as follows:
1. Mr. French's employment with the Company terminated affective August 14,
1998. After August 14, 1998, Mr. French was not entitled to any salary, wages,
commissions, options, common shares, bonuses, profit sharing, benefits, accrued
vacation, insurance or other compensation from Company or any related entity
except as set forth in paragraph (2) below.
2. In consideration for the execution of this Agreement and the performance of
the terms and conditions herein, the Company agrees that it will issue a
restricted certificate for 150,000 shares of Imaging Technologies Corporation
Common Stock ("ITEC Shares") to Mr. French, within ten (10) days of the
Company's receipt of an executed original of this Agreement. The Company shall
include said shares within its next appropriate registration filed with the SEC.
If such registration is not effective within thirty (30) days of the signing of
this Agreement, then this Agreement shall be null and void.
3. Mr. French agrees and recognizes that by signing this Agreement, his
employment relationship with Company is permanently and irrevocably severed as
of the date set forth in Paragraph 1 above, and that the Company and its
related, affiliated, parent or subsidiary companies, past or present,
predecessors or successors, have no obligation, contractual or otherwise, to
hire, rehire, re-employ, or recall Mr. French in the future.
4. Mr. French represents and warrants that he has not initiated and is not a
party to any pending lawsuit, administrative or other proceeding against any of
the parties released herein.
5. Mr. French understands and acknowledges that during the course of his
employment by the Company and its related entities, including Color Solutions,
Inc., he had access to and became acquainted with trade secrets and other
confidential information of the Company including but not limited to personnel
files, customer names, client names, compilations of information, records,
product information, compilations, devices, methods, processes, computer
programs, financial information, publication information, inventions
E-4
or research projects, information of a business nature, such as information
about costs, projects, markets, sales and other information of a similar nature
not available to the public and plans for future developments, (collectively
"Confidential Information"), and vendor information which are owned by the
Company and which are regularly used in the operation of the business of the
Company. Mr. French further understands and acknowledges that despite
termination of his relationship with the Company, he has a continuing legal
obligation not to disclose, an not to use, directly or indirectly, any such
trade secrets or Confidential Information owned by the Company or related
entitles.
6. Mr. French understands and acknowledges that all personnel files, customer
names, client names, compilations of information records, product information,
compilations, devices, methods, processes, computer programs, financial
information, publication information, inventions or research projects,
information of business nature, such as information about costs, profits,
markets, sales and other information of a similar nature not available to the
public, and plans for future developments, documents, equipment, computer
programs, printouts, memoranda, lists, notes, work product, journal documents,
production documents, photographic material advertising materials or other items
utilized for promotion, vendor information and similar material relating to the
business of the Company, and all copies of same, whether prepared by him or
otherwise coming into his possession during the term of his employment with the
Company and its predecessor, Color Solutions, Inc., are the exclusive property
of the Company. Mr. French agrees that to the extent he has any such material or
items in his possession, he will return all such material or items to the
Company on or before June 1, 1999.
7. In consideration of the covenants set forth in this Agreement, and for other,
good and valuable consideration, receipt of which is hereby acknowledged, Mr.
French releases the Company and its parents, subsidiaries, affiliates, related
entities or business concerns, past or present, predecessors, successors and
agents and their respective offices, directors, members, attorneys, agents,
executors, administrators and representatives, present and former employees from
any and all claims of any kind, known or unknown, that arose on or before the
Effective Date of this Agreement. The claims Mr. French releases include,
without limitation, all claims in any way related to or arising out of any
aspect of Mr. French's employment by the Company, including any employment
agreement with the Company and the related Merger Agreement. This includes,
without limitation, all claims for wrongful termination, constructive
termination, emotional distress, age discrimination under Federal Age
Discrimination and Employment Act, 29 U.S.C. ss.621 et seq and California
Government Code ss. 12940 et seq, hostile work environment, retaliation,
defamation, breach of contract. false light, disparagement, negligent hiring or
supervision or retention, negligence, all claims for compensation or unpaid
accrued vacation, claims arising out of agreements, representations or policies
related to Mr. French's employment, claims arising under federal, state or local
laws or ordinances prohibiting discrimination or retaliation on the basis or
race, color, national origin, sex, equal pay, disability or any other status,
claims for violation of public policy, including California Fair Employment and
Housing Act claims, claims under Title VII of the Civil Rights Act of 1964,
Americans With Disabilities Act, Federal Family and Medical Leave Act,
California Family Rights Act, and the California Pregnancy Disability Leave Act,
an claims for attorneys' fees, costs or expenses incurred in connection with
raising any such claims. This release includes any and all claims, demands,
rights, causes of action, obligations and liabilities of any kind whatsoever,
known or unknown, at law or in equity, which Mr. French may have or claims to
have, which are or which may be based upon any facts, acts, conduct, omissions,
documents, representations, proposals, contracts, claims, events or other things
occurring at any time on or before the date of execution of this Agreement, and
relating to or arising from any aspect of the Company's employment of Mr. French
and/or relating to the Merger Agreement.
8. After the issuance of the ITEC Shares, the Company shall have no further
obligation to Mr. French with regard to compensation, salary, employee benefits,
accrued vacation or personal time or any compensation whatsoever. Moreover, Mr.
French shall be solely responsible for determining the tax consequences of the
tender of ITEC Shares pursuant to this Agreement, reporting the same to the
appropriate governmental authorities, and the payment of any taxes due thereon.
Mr. French shall defend, indemnify, and hold the Company and each of their
respective affiliates, successors and assigns, harmless from and against any and
all losses, including, but not limited to attorneys' fees, costs, back taxes,
and interest and penalties,
E-5
which any suffers as a result of such tax determination by Mr. French, the
report or non-reporting thereof, and/or the payment or failure to pay any tax
thereon. In the event of any audit or governmental inquiry with respect to the
settlement payment made to Mr. French, Mr. French agrees to provide his full
cooperation of the Company, including, but not limited to providing the Company
with copies of all tax returns filed with respect to such tender of ITEC Shares.
9. It is expressly agreed that confidentiality of the terms of this Agreement is
of material importance to the parties and was a material inducement to the
execution of this Agreement. Therefore, the parties each agree that the terms of
this Agreement shall remain strictly confidential and that neither shall make
any disclosure to any third person of the terms of this Agreement, except as
required by law and the Company shall advise its appropriate corporate officers
or managing agents, attorneys, or its auditors, of the terms of this Agreement.
Mr. French may advise his spouse, attorney or tax advisor of the terms of the
Agreement. Mr. French further agrees that he shall not in any way characterize
this Agreement. In the case of an inquiry, Mr. French may only indicate that all
claims have been settled and that the terms are confidential. Mr. French
warrants and covenants that he has not communicated to any person, other than
his spouse, attorney or tax advisor, prior to the execution of this Agreement
any term of this Agreement, including but not limited to the amount of the
consideration to be received. Mr. French further agrees and promises not to
encourage, facilitate, provide or otherwise support any claim by a third party
against any of the Releases, and he will not participate in any civil litigation
of any third party claim against any of the Releases, including providing a
witness statement, declaration, affidavit or testimony, unless compelled to do
so by a lawful court order or subpoena. A breach of this provision of this
Agreement shall be deemed a material violation of the Agreement.
10. Each party represents and warrants that such party is not relying, has not
relied upon, any representations or statements made by any other party with
regard to the facts involved in this controversy or the execution and terms of
this Agreement. Each party has consulted with an attorney regarding the terms of
this Agreement and has entered into this Agreement freely, willingly and without
any coercion or duress from anyone.
11. This Agreement and the payment provided for in this Agreement do not
constitute an admission of liability on the part Mr. French or the Company or
its parents, subsidiaries, affiliates, past or present, predecessors, successors
and agents and their respective officers, directors, members, attorneys, agents,
executors, administrators and representatives, present and former employees,
directly or by implication, that any of the parties have violated any law, rule,
regulation, policy or any contractual right or other obligation owed to any
party. The Company specifically denies any allegations of improper or unlawful
conduct or breach of contract allegations in relation to his separation from
employment. Mr. French denies any allegations of impropriety on his part.
Neither this Agreement nor anything in it shall be construed to be or shall be
admissible in any proceedings as evidence of or an admission by the Company of
any violation of any contract, rule, regulation, order or other law. This
Agreement may be introduced, however, in any proceeding to enforce its terms.
Such introduction shall be pursuant to an order protecting its confidentiality.
12. Mr. French represents and warrants that he has not heretofore assigned,
transferred or purported to assign or transfer to any other person or entity any
rights, claims or causes of action herein released and discharged and no other
person or entity has any interest in the matters herein released and discharged.
Furthermore, Mr. French shall indemnify and hold the Company, and all its
persons or entities released herein harmless from and against any rights, claims
or causes of action which arise from or have been assigned or transferred
contrary to the foregoing representations, or in violation of the foregoing
warranties, and shall hold such persons or entities harmless from any and all
loss, expense and/or liability arising directly or indirectly out of the breach
of any of the foregoing representations or warranties.
13. If the Company is contacted by any prospective or future employer of Mr.
French, the Company will only provide the dates of Mr. French's employment and
his last position held. His departure shall be characterized as a voluntary
resignation. No additional information shall be provided.
E-6
14. Mr. French expressly waives any and all rights which he might have under
Section 1542 of the Civil Code of the State of California which reads as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THE CREDITOR DOES NOT KNOW OR
SUSPECT TO WHICH EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Notwithstanding Section 1542 of the Civil Code of California, Mr. French and the
Company expressly agree that this Agreement shall be given full force, and
effect according to each and all of its express terms and provisions, including
as well those relating to unknown a d unspecified actions, causes of action,
claims or other proceedings, judgments, obligations, damages, or other
liabilities, if any.
15. Except as provided herein, Mr. French and the Company expressly agree that
neither they nor their spouses, employees, its parents, subsidiaries,
affiliates, predecessors, successors and agents and their respective officers,
directors, members, attorneys, agents, executors, administrators and
representatives will institute or maintain any legal or administrative
proceedings against any party to this Agreement, or any person or entity
released in this Agreement, before any court, administrative agency, arbitrator
or any other tribunal whatsoever, by reason of any claim, liability or cause of
action, whether known or unknown, being released herein.
16. Mr. French agrees to cooperate with the Company in relation to any lawsuits
or legal proceedings involving the Company to the extent the request(s) for his
participation are reasonable in scope, including personal interviews with the
Company's legal counsel in preparation for his potential testimony regarding
human resource or related matters at the Company.
17. This Agreement shall be construed and governed by the laws of the State of
California. In the event that any provision of this Release of Claims Agreement
is held to be void, null or unenforceable, the remaining portions shall remain
in full force and effect. To this end, the provisions of this Agreement are
severable.
18. Mr. French acknowledges that Mr. French may later discover facts different
from or in addition to those which he knows or believes to be true with respect
to all or any of the liabilities, claims, defenses, causes of action, costs or
demands released in this Agreement; however Mr. French agrees that the general
release set forth above shall be and shall remain effective in al respects,
notwithstanding the discovery of such different or additional facts. Mr. French
and Company each acknowledge and represent that no promise or representation not
contained in this Agreement has been made to them, and acknowledge and represent
that this Agreement contains all terms and conditions pertaining to the
compromise and settlement of the potential claims and causes of actions
referenced in this Agreement are contractual and not a mere recital. The terms
of this Agreement can only be modified by a writing signed by the parties
expressly stating that such modification is intended.
19. This Agreement and the provisions contained herein shall not be construed or
interpreted for or against any party hereto because the party drafted or caused
that party's legal representative to draft any of its provisions.
20. In the event of dispute between the parties regarding the terms, conditions
or enforceability of this Agreement, the dispute shall be resolved by binding
arbitration under the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association in front of a mutually agreeable
arbitrator and shall be held in San Diego, California. This Agreement shall be
construed in accordance with and may be deemed governed by the laws of the State
of California in any arbitration proceeding.
21. The parties to this Agreement shall execute any and all further documents
that may be required to effectuate the purposes of this Agreement.
E-7
22. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and to their respective representatives, successors, agents and
assigns.
23. This Agreement may be executed in counterparts, and if so executed each such
counterpart shall have the force and effect of an original, including facsimile
signatures.
24. The invalidity of any provisions of this Agreement as determined by a court
or arbitrator of competent jurisdiction shall in no way affect the validity of
any other provision hereof.
25. No breach of any provision of this Agreement can be waived unless in
writing. Waiver of any one breach shall not be deemed to be a waiver of any
other breach of the same or any other provision of this Agreement.
26. Mr. French understands, represents and certifies that he has carefully read
and fully understood all of the provisions and effects of this Agreement and
that he is knowingly and voluntarily entering into this Agreement free of any
duress or coercion.
27. In compliance with the Older Worker's benefit protection (at P.L. 101-433)
Mr. French and the Company acknowledge as follows:
a) Mr. French has been given a period of twenty-one (21) days
within which to consider whether to sign this Agreement, and as
freely elected in consultation with his attorneys to execute the
Agreement on the date set forth below;
b) Mr. French has consulted with his attorneys before signing the
Agreement;
c) This Agreement shall be revocable for the seven (7) day period
following the execution of this Agreement. Revocation must be
made by delivering written notice to ▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, no later than
the close of business on the seventh calendar day after Mr.
French signs the Agreement. If Mr. French revokes this
Agreement, it shall not be effective in any respect.
IMAGING TECHNOLOGIES CORPORATION and its
related subsidiaries and divisions
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------- -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer and
President
Dated: 6/15/99 Dated: 6/15/99
-------------------------- --------------------------
APPROVED AS TO FORM
LAW OFFICES OF ▇▇▇▇ ▇. ▇▇▇▇▇ & ASSOCIATES
Dated: By:
-------------------------- -------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Attorneys for
IMAGING TECHNOLOGIES
CORPORATION and its related
subsidiaries and divisions
E-8
Dated: By:
-------------------------- -------------------------------
Attorneys for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
E-9
