EXHIBIT 4.1
SETTLEMENT AGREEMENT AND RELEASE
This SETTLEMENT AGREEMENT AND RELEASE dated as of December 31, 2002
(this "Settlement Agreement"), by and between Xybernaut Corporation, a Delaware
corporation ("Xybernaut"), Xxxxxxxx Xxxxx, a New York resident ("Xxxxx"), and
NWCS LLC doing business as IBS Technologies LLC, a New York limited liability
company ("IBS").
WHEREAS, Xybernaut and IBS had entered into that certain Marketing and
Showcase Agreement dated as of January 1, 2002, as amended (the "Marketing
Agreement"); and
WHEREAS, Xybernaut has asserted that IBS is in material default under
the Marketing Agreement; and
WHEREAS, IBS and Xxxxx have disputed that IBS has defaulted under the
Marketing Agreement; and
WHEREAS, IBS is no longer a lessee of certain premises in the
Waldorf-Astoria Hotel, thereby making it impossible for IBS to perform its
obligations under the Marketing Agreement; and
WHEREAS, in order to avoid the costs of litigation and the management
time associated therewith, Xybernaut, on the one hand, and Xxxxx and IBS, on the
other hand, have concluded it is in their respective best interests to resolve
their dispute under and related to the Marketing Agreement; and
WHEREAS, without admitting any wrongdoing or liability, or
acknowledging the validity of any claim, asserted or unasserted, Xybernaut, on
the one hand, and Xxxxx and IBS, on the other hand, have reached an amicable
settlement and have agreed to resolve all claims and other disputes between them
arising out of, and relating to, the Agreements and the transactions
contemplated thereby, in the manner set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and the other good and valuable consideration as set forth in this
Settlement Agreement, the legal adequacy of which is hereby acknowledged, the
parties agree as follows:
1. No Admission of Fault. Each of Xybernaut, Xxxxx and IBS
acknowledges and agrees that it/he is entering into this Settlement Agreement in
order to settle and resolve all disputed matters among them arising out of or in
any way relating to the Marketing Agreement and the transactions contemplated
thereby and it/he is not admitting any wrongdoing or liability on its part in
any way relating to such matters, and no inference regarding any such wrongdoing
or liability is intended by virtue of the parties entering into this Settlement
Agreement.
2. Consideration to IBS. Notwithstanding anything set forth in the
Marketing Agreement, it is agreed that the total consideration due to Xxxxx
and/or IBS in respect of the transactions contemplated by the Marketing
Agreement and in consideration of Xxxxx and IBS entering into this Agreement
shall be as follows:
(a) Issuance of Common Stock. Xybernaut shall issue to IBS a
certificate representing 250,000 shares of the common stock of Xybernaut, par
value of $0.01 per share (the "Shares"), promptly following the execution and
delivery of this Settlement Agreement.
(b) Piggyback Registration Rights. If the Company at any time
proposes to register any of the Common Stock in the United States (except
pursuant to registrations on Form S-4 or Form S-8 or any other successor forms
or comparable forms promulgated by the Securities and Exchange Commission), IBS
shall have piggyback registration rights with respect to the Shares pursuant to
the terms which will be evidenced by a registration rights agreement, which will
entitle IBS to include the Shares in the registration statement, to the extent
provided in the Registration Rights Agreement.
(c) No Other Consideration. Except for the consideration set
forth in this Section 2, no other consideration shall be due or payable to IBS
or Xxxxx thereby.
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3. Release by Xybernaut of IBS. Xybernaut for itself hereby releases
and forever discharges IBS from any and all claims, suits, debts, liens,
liabilities, losses, causes of action, rights, damages, demands, obligations,
promises, costs and expenses (including, without limitation, attorneys' fees and
expenses) of every kind, nature and description, in law or in equity, whether
known or unknown, or known in the future, fixed or contingent, billed or
unbilled, suspected, disclosed or undisclosed, claimed or concealed, from the
beginning of time through the date of this Settlement Agreement, which Xybernaut
could assert against IBS relating to or arising out of the Marketing Agreement
and the transactions contemplated thereby, except for a breach of this
Settlement Agreement by IBS, including, without limitation, a breach of any of
the representations and warranties made by IBS in this Settlement Agreement.
4. Release by Xybernaut of Xxxxx. Xybernaut for itself hereby releases
and forever discharges Xxxxx from any and all claims, suits, debts, liens,
liabilities, losses, causes of action, rights, damages, demands, obligations,
promises, costs and expenses (including, without limitation, attorneys' fees and
expenses) of every kind, nature and description, in law or in equity, whether
known or unknown, or known in the future, fixed or contingent, billed or
unbilled, suspected, disclosed or undisclosed, claimed or concealed, from the
beginning of time through the date hereof, which Xybernaut could assert against
any Xxxxx relating to or arising out of the Marketing Agreement and the
transactions contemplated thereby, except for a breach of this Settlement
Agreement by Xxxxx, including, without limitation, a breach of any of the
representations and warranties made by Xxxxx in this Settlement Agreement.
5. Release by IBS of Xybernaut. IBS hereby releases and forever
discharges Xybernaut from any and all claims, suits, debts, liens, liabilities,
losses, causes of action, rights, damages, demands, obligations, promises, costs
and expenses (including, without limitation, attorneys' fees and expenses) of
every kind, nature and description, in law or in equity, whether known or
unknown, or known in the future, fixed or contingent, billed or unbilled,
suspected, disclosed or undisclosed, claimed or concealed, from the beginning of
time through the date hereof, which IBS could assert against Xybernaut relating
to or arising out of the Marketing Agreement and the transactions contemplated
thereby, except for a breach of this Settlement Agreement by Xybernaut
including, without limitation, a breach of any representations and warranties
made by Xybernaut in this Settlement Agreement.
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6. Release by Xxxxx of Xybernaut. Xxxxx for himself and on behalf of
his heirs, estate, successors and assigns, hereby releases and forever
discharges Xybernaut from any and all claims, suits, debts, liens, liabilities,
losses, causes of action, rights, damages, demands, obligations, promises, costs
and expenses (including, without limitation, attorneys' fees and expenses) of
every kind, nature and description, in law or in equity, whether known or
unknown, or known in the future, fixed or contingent, billed or unbilled,
suspected, disclosed or undisclosed, claimed or concealed, from the beginning of
time through the date hereof, which Xxxxx could assert against Xybernaut
relating to or arising out of the Marketing Agreement and the transactions
contemplated thereby, except for a breach of this Settlement Agreement by
Xybernaut including, without limitation, a breach of any of the representations
and warranties made by Xybernaut in this Settlement Agreement.
7. Representations and Warranties of Xybernaut. Xybernaut hereby
represents and warrants to Xxxxx and IBS as follows:
(a) Xybernaut has the corporate power and authority to execute,
deliver and perform this Settlement Agreement and to issue the Shares.
(b) The execution, delivery and performance of this Settlement
Agreement, the issuance of the Shares have been duly authorized by Xybernaut in
accordance with all requisite corporate power and authority.
(c) No consents or approvals of, notices to or filings with, any
person or entity are required to be obtained by Xybernaut in connection with its
execution, delivery and performance of this Settlement Agreement and the
issuance of the Shares.
(d) Xybernaut has received, or has had the opportunity to
receive, independent legal advice from attorneys of its choice with respect to
the terms and provisions of this Settlement Agreement, the advisability of
entering into this Settlement Agreement and of the consequences of entering into
this Settlement Agreement.
(e) Xybernaut has made such investigation of the facts pertaining
to this Settlement Agreement and to the transactions contemplated hereby, as it
considers appropriate.
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(f) This Settlement Agreement constitutes a legal, valid and
binding obligation of Xybernaut, enforceable against Xybernaut in accordance
with its terms, except as enforcement may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general applicability affecting the enforcement of creditors' rights and (ii)
the application of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(g) The execution, delivery and performance of this Settlement
Agreement by Xybernaut and the issuance of the Shares shall not (i) violate or
contravene the certificate of incorporation or by-laws of Xybernaut; (ii)
violate or constitute a breach of, or default under, any material agreement or
other instrument binding upon Xybernaut or to which it is a party; (iii) violate
or contravene any judgment, decree or order of any court or regulatory body
binding upon Xybernaut; or (iv) violate any law or regulation applicable to
Xybernaut.
8. Representations and Warranties of Xxxxx. Xxxxx hereby represents
and warrants to Xybernaut as follows:
(a) Xxxxx has the legal capacity to execute, deliver and perform
this Settlement Agreement.
(b) No consents or approvals of, notices to or filings with, any
person or entity is required by Xxxxx in connection with the execution, delivery
and performance of this Settlement Agreement.
(c) Xxxxx has received independent legal advice from attorneys of
his choice with respect to the terms and provisions of this Settlement
Agreement, the advisability of entering into this Settlement Agreement and of
the consequences of entering into this Settlement Agreement.
(d) Xxxxx has made such investigation of the facts pertaining to
this Settlement Agreement and to the transactions contemplated by this
Settlement Agreement, as he considers appropriate.
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(e) This Settlement Agreement constitutes a legal, valid and
binding obligation of Xxxxx, enforceable against Xxxxx in accordance with its
terms, except as enforcement may be limited by (i) applicable bankruptcy,
insolvency or other similar laws of general applicability affecting the
enforcement of creditors' rights and (ii) the application of general principles
of equity (regardless of whether considered in a proceeding in equity or at
law).
(f) The execution, delivery and performance of this Settlement
Agreement by Xxxxx shall not (i) violate or constitute a breach of, or default
under, any material agreement or other instrument binding upon Xxxxx or to which
he is a party; or (ii) violate or contravene any judgment, decree or order of
any court or regulatory body binding upon Xxxxx.
9. Representations and Warranties of IBS. IBS hereby represents and
warrants to Xybernaut as follows:
(a) IBS has the corporate power and authority to execute, deliver
and perform this Settlement Agreement.
(b) The execution, delivery and performance of this Settlement
Agreement has been duly authorized by IBS in accordance with all requisite
corporate power and authority.
(c) No consents or approvals of, notices to or filings with, any
person or entity are required by IBS in connection with the execution, delivery
and performance of this Settlement Agreement.
(d) IBS has received independent legal advice from attorneys of
its choice with respect to the terms and provisions of this Settlement
Agreement, the advisability of entering into this Settlement Agreement and of
the consequences of entering into this Settlement Agreement.
(e) IBS has made such investigation of the facts pertaining to
this Settlement Agreement and to the transactions contemplated by this
Settlement Agreement, as it considers appropriate.
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(f) This Settlement Agreement constitutes a legal, valid and
binding obligation of IBS, enforceable against IBS in accordance with its terms,
except as enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights and (ii) the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law).
(g) The execution, delivery and performance of this Settlement
Agreement by IBS shall not (i) violate or contravene the certificate or by-laws
of IBS; (ii) violate or constitute a breach of, or default under, any material
agreement or other instrument binding upon IBS or to which it is a party; or
(iii) violate or contravene any judgment, decree or order of any court or
regulatory body binding upon IBS.
10. Ownership of Claims. Each of Xybernaut, on the one hand, and Xxxxx
and IBS, on the other hand, represent and warrant to the other, that it is the
lawful and sole owner of the claims being released hereby and it has not sold,
transferred, assigned, pledged, hypothecated or otherwise encumbered any such
claim.
11. Confidentiality. Commencing from the date hereof each of the
parties shall keep the terms and provisions of this Settlement Agreement
confidential and shall not disclose such terms and provisions to any person or
entity, except (i) as may be required by applicable law or regulation; (ii)
pursuant to applicable subpoena; (iii) in connection with the enforcement of
this Settlement Agreement; and (iv) to their respective attorneys and
accountants, who are advised of the confidential nature of this Settlement
Agreement prior to disclosure and who agree to be bound by the confidentiality
obligations set forth in this Section 11 to the sane extent as if they were a
party hereto.
12. Notices. All notices, demands, consents, requests, instructions
and other communications to be given or delivered or permitted under or by
reason of the provisions of this Settlement Agreement or in connection with the
transactions contemplated hereby shall be in writing and shall be deemed to be
delivered and received by the intended recipient as follows: (i) if personally
delivered, on the Business Day of such delivery (as evidenced by the receipt of
the personal delivery service), (ii) if mailed certified or registered mail
return receipt requested,
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four (4) Business Days after being mailed, (iii) if delivered by overnight
courier (with all charges having been prepaid), on the Business Day of such
delivery (as evidenced by the receipt of the overnight courier service of
recognized standing), or (iv) if delivered by facsimile transmission, on the
Business Day of such delivery if sent by 6:00 p.m. in the time zone of the
recipient, or if sent after that time, on the next succeeding Business Day (as
evidenced by the printed confirmation of delivery generated by the sending
party's telecopier machine). If any notice, demand, consent, request,
instruction or other communication cannot be delivered because of a changed
address of which no notice was given (in accordance with this Section 12), or
the refusal to accept same, the notice, demand, consent, request, instruction or
other communication shall be deemed received on the second Business Day the
notice is sent (as evidenced by a sworn affidavit of the sender). All such
notices, demands, consents, requests, instructions and other communications will
be sent to the following addresses or facsimile numbers as applicable::
If to Xybernaut:
Xybernaut Corporation
00000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: H. Xxx Xxxxxxx-Xxxxx, Esq.
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
If to Xxxxx:
Mr. Xxxxxxxx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
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If to IBS:
c/o Mr. Xxxxxxxx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
or to such other address as any party may specify by notice given to the other
party in accordance with this Section 12.
13. Governing Law. This Settlement Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State, without regard to any of its
principles of conflicts of laws or other laws which would result in the
application of the laws of another jurisdiction. This Settlement Agreement shall
be construed and interpreted without regard to any presumption against the party
causing this Settlement Agreement to be drafted.
14. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SETTLEMENT AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
15. Miscellaneous.
(a) No party may assign any of its rights or delegate any of its
duties under this Settlement Agreement without the prior written consent of the
other party hereto. This Settlement Agreement shall be binding upon the
successors and permitted assigns of the parties and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
(b) The provisions of this Settlement Agreement shall not be
construed as a waiver of any party's right to bring suit to enforce the terms
and provisions of this Settlement Agreement.
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(c) This Settlement Agreement contains a complete statement of
all the arrangements, understandings and agreements among the parties with
respect to the subject matter hereof, supersede all other arrangements,
understandings and agreements, whether written or oral, among them relating to
such subject matter, all of which are merged herein. This Settlement Agreement
cannot be altered, modified, waived or amended, except by an instrument in
writing executed by each of the parties hereto.
(d) Section headings contained in this Settlement Agreement are
included herein solely for convenience of reference only and are not intended to
affect the interpretation or construction of any of the terms or provisions of
this Settlement Agreement.
(e) This Settlement Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together shall constitute one and the same instrument. The facsimile
signature of a party hereto shall constitute a valid and effective signature.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF each of the parties has duly executed this
Settlement Agreement as of the date first above written.
XYBERNAUT CORPORATION
By:
-------------------------------------
Name:
Title:
IBS TECHNOLOGIES LLC
By:
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Name:
Title:
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Xxxxxxxx Xxxxx
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