SETTLEMENT AGREEMENT
Exhibit
10.6
This
Settlement Agreement (the “Agreement”) is entered into among XxXxxxxx’x
Corporation (“McDonald’s”), and Card Activation Technologies, Inc., a Delaware
corporation with its principal place of business at 00 Xxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxx 00000, together with all other Affiliates of Card Activation
Technologies, Inc. (including but not limited to its parent, MedCom USA, Inc.)
(collectively referred to herein as CAT). (All parties shall be
referred to collectively as the “Parties.”) In consideration of the
promises, covenants, and releases contained herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:
I.
RECITALS
WHEREAS,
CAT represents and warrants that it is the owner of U.S. Patent No. 6,032,859
(the “’859 Patent”);
WHEREAS,
McDonald’s offers a payment system that includes cashless forms of payment, such
as credit cards, debit cards and gift or “stored value” cards at its
restaurants, affiliated restaurants and franchised restaurants;
WHEREAS,
McDonald’s and CAT are parties to a lawsuit captioned Card Activation
Technologies, Inc. x. XxXxxxxx’x Corporation and Walgreen Company, Case No.
06 CV 5578, pending in the United States District Court for the Northern
District of Illinois before Judge Xxxxxxx Xxxxxxx (the “Lawsuit”).
WHEREAS,
CAT has represented to McDonald’s that CAT is accepting the consideration
referenced herein based, inter alia, on CAT’s desire to obtain a
settlement prior to any significant litigation with McDonald’s, including
McDonald’s filing an Answer to the Complaint filed in the Lawsuit, and also as
CAT’s initial settlement of any claims related to the ‘859 Patent, as referenced
herein, in an effort to potentially xxxxxx additional settlements and/or
licenses related to the ‘859 Patent.
The
Parties have agreed to resolve any and all claims that the Parties asserted
or
could have asserted in the Lawsuit and all other claims, whether known or
unknown, present or contingent, that CAT may have against McDonald’s, or that
McDonald’s may have against CAT, relating to any matter whatsoever as of or
prior to the Effective Date as set forth in this Agreement.
II.
DEFINITIONS
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A.
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‘859
Patent. The “’859 Patent” shall mean United States
Patent Number 6,032,859 and (i) all United States continuations,
continuations-in-part, divisionals and other patent rights claiming
priority (directly or indirectly) to any of the aforementioned patents
and
patent applications; (ii) as well as all counterparts thereof in
foreign
countries and any patents and patent applications to which those
patents
claim priority (if applicable); and (iii) all reissues, reexaminations,
renewals and extensions of any of the
foregoing.
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III.
TERMS
OF AGREEMENT
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A.
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Recitals. To
the best of the Parties’ knowledge the information contained in the
Recitals, which are incorporated herein by reference, is
accurate.
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B.
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Acknowledgments. The
Parties hereby acknowledge that this Agreement, together with the
“Patent
License and Covenant Not to Xxx” attached hereto as Exhibit A, settles and
compromises all disputes and claims made and denied by them, and
that by
entering into this Agreement, no party is admitting the validity
of any
claim.
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C.
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Effective
Date. The “Effective Date” contemplated by this
Agreement (including Exhibits) will be February 27, 2007, or such
other
date as CAT and McDonald’s may agree to in
writing.
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D.
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No
Others With Interest in ‘859 Patent. CAT
represents and warrants that no other individuals or entities have
an
ownership interest in the ‘859 Patent other than CAT, as defined in this
Agreement.
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E.
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Agreed
Orders of Dismissal. On or before March 2, 2007,
the parties will file with the Court the Stipulation of Dismissal
with
Prejudice in the form attached hereto as Exhibit B (the “Agreed
Stipulation of Dismissal”).
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F.
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Payment
by McDonald’s. On or before March 2, 2007, as
provided by the terms of the Patent License and Covenant Not to Xxx,
McDonald’s shall pay to CAT the sum of
$45,000.
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G.
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General
Release by CAT. CAT, for itself and all of its
past and present successors, predecessors, beneficiaries, executors,
trustees, administrators, subrogees, agents, attorneys, representatives,
employees, officers, directors, partners, parent corporations,
subsidiaries, and affiliates (including without limitation MedCom
USA,
Inc.) (collectively referred to hereinafter as the “CAT Parties”),
irrevocably and absolutely releases and forever discharges McDonald’s, its
past, present and future predecessors, successors-in-interest, assignees,
nominees, subsidiaries, affiliates, authorized franchisees (including
the
authorized franchisees of all subsidiaries and affiliates), divisions,
officers, directors, employees, attorneys, servants, representatives,
partners, and agents (collectively referred to hereinafter as the
“McDonald’s Released Parties”), of and from all claims, obligations,
actions, or causes of action (however denominated), whether in law,
statute or in equity and whether known or unknown, present or contingent,
for any injury, damage or loss whatsoever which they may now or hereafter
have, own or claim to have against the McDonald’s Released Parties by
reason of (i) any matter whatsoever occurring prior to and through
the
Effective Date, including but not in any sense limited to, all claims
that
were or that could have been asserted in the Lawsuit for any reason
whatsoever, or (ii) the ‘859 Patent, but excluding any and all
representations, warranties, obligations, duties and covenants arising
from this Agreement (including the Patent License and Covenant Not
to Xxx
attached as Exhibit A to this
Agreement).
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A
list of the current subsidiaries and affiliates of McDonald’s is set forth
in Exhibit 1 of the Patent License and Covenant Not to Xxx attached
as
Exhibit A to this Agreement. The CAT Parties also covenant not
to xxx any of the McDonald’s Released Parties regarding any of the claims
being released by this Agreement. The Parties intend for the
McDonald’s Released Parties that are not parties to this Agreement to be
third-party beneficiaries of the release provided for by this
paragraph. The parties agree and acknowledge that this Release,
and the Patent License and Covenant Not to Xxx attached as Exhibit
A to
this Agreement, do not, and shall not be construed to, release
or limit in
any manner any claims, actions or causes of action that the CAT
Parties
have, had or may have against any of McDonald’s third-party suppliers or
providers, including but not limited VeriFone Holdings, Inc., and
VeriFone. THIS RELEASE IS A GENERAL RELEASE AND THE
PARTIES INTEND AND AGREE THAT IT SHALL BE INTERPRETED, CONSTRUED,
AND
ENFORCED AS SUCH.
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H.
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Limited
Release by McDonald’s. McDonald’s for itself and
all of its successors, predecessors, beneficiaries, executors, trustees,
administrators, subrogees, agents, attorneys, representatives, employees,
officers, directors, partners, parent corporations, subsidiaries,
and
affiliates, hereby releases and forever discharges the CAT Parties
of and
from all claims, obligations, actions, or causes of action (however
denominated), whether in law, statute or in equity and whether known
or
unknown, present or contingent, for any injury, damage or loss whatsoever
which they may now or hereafter have, own or claim to have against
the CAT
Parties by reason of (i) any claims that were or that could have
been
asserted in the Lawsuit for any reason whatsoever, or (ii) the ‘859
Patent, but excluding any and all representations, warranties,
obligations, duties and covenants arising from this Agreement (including
the Patent License and Covenant Not to Xxx attached as Exhibit A
to this
Agreement).
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IV.
GENERAL
PROVISIONS
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A.
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No
Assignment. CAT warrants and represents that it
has not made any assignment or transfer of any right, claim, demand,
cause
of action, or other matter covered by the Release set forth
herein.
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B.
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Attorneys’
and Experts’ Fees. Each of the Parties shall bear
all of its own costs and expenses, including, without limitation,
legal
fees incurred in connection with the Lawsuit and the preparation,
negotiation, and/or review of this
Agreement.
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C.
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Mediation. Each
Party agrees that if a dispute arises between them regarding this
Agreement (including Exhibits), it will give the other party written
notice of the dispute. The Parties agree that if they are
unable to resolve the dispute, they will mediate the dispute for
purposes
of seeking resolution through supplemental negotiations within thirty
(30)
days of the notice (or later if mutually agreed to by the Parties
involved
in the dispute).
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D.
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Reimbursement
of Fees and Costs for Violation of Releases. CAT
agrees that if it, or anyone claiming through it sues any of the
McDonald’s Released Parties, it shall reimburse the McDonald’s Released
Parties for all attorneys’ fees, costs, and expenses incurred by the
McDonald’s Released Parties in defending that subsequent lawsuit if it is
ruled that this Agreement bars the claims asserted in that subsequent
lawsuit.
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E.
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Reimbursement
of Fees and Costs to Enforce Agreement. If
McDonald’s institutes any action at law or in equity against CAT to secure
or protect its rights under or to enforce the terms of or for breach
of a
representation or warranty in this Agreement, in addition to any
judgment
entered in its favor, McDonald’s shall be entitled to recover such
attorneys’ fees together with court costs and expenses of
litigation. Likewise, if CAT institutes any action at law or in
equity against McDonald’s to secure or protect its rights under or to
enforce the terms of or for breach of a representation or warranty
in this
Agreement, in addition to any judgment entered in its favor, CAT
shall be
entitled to recover such attorneys’ fees together with court costs and
expenses of litigation.
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F.
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Drafting. This
Agreement was negotiated at arm’s-length, mutually drafted, and entered
into freely by the Parties with the advice of counsel. In the
event an ambiguity exists in any provision of this Agreement, such
ambiguity is not to be construed by reference to any doctrine or
statute
calling for ambiguities to be construed against the drafter of the
document.
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G.
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Captions. The
captions or headings of the Sections or Paragraphs of this Agreement
are
for convenience of reference only and in no way define, limit or
affect
the scope or substance of any Section or Paragraph of this
Agreement.
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H.
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Scope
of Promises, Representations, and Inducements. The
Parties acknowledge, warrant and represent that no promises,
representations or inducements, except as herein set forth, have
been
offered or made by any of the Parties to secure the execution of
the
Release above or this Agreement, and that the Release above and this
Agreement are executed without reliance on any statements or any
representations not contained herein. Each of the Parties
knowingly waives (1) any claim that this Agreement was induced by
any
misrepresentation or nondisclosure, and (2) any right to rescind
or avoid
this Agreement based upon presently existing facts, known or
unknown.
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I.
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Voluntary
Agreement. Each of the Parties certifies that it
is voluntarily entering into this Agreement in good faith based solely
and
completely upon its own judgment and with the advice of counsel following
its good-faith assessment of the disputes at
issue.
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J.
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Survival. The
Parties hereby agree that the provisions of this Agreement, including,
without limitation, the representations, warranties, covenants and
Release
made herein, shall survive the execution of this Agreement and the
performance by the Parties of their respective obligations under
this
Agreement.
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K.
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Severability. Any
part, provision, representation or warranty of this Agreement that
is
prohibited or unenforceable, or is held by a court of competent
jurisdiction to be void or unenforceable, in any jurisdiction shall,
as to
such jurisdiction, be ineffective to the extent of such prohibition
or
unenforceability without invalidating the remaining parts, provisions,
representations or warranties herein, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the Parties hereby knowingly,
voluntarily, and intelligently waive any provision of law that prohibits
or renders void or unenforceable any part, provision, representation
or
warranty hereof.
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L.
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Entire
Agreement. This Agreement (including Exhibits)
constitutes the entire agreement of the Parties hereto and supersedes
all
prior and contemporaneous agreements and understandings of the
Parties.
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M.
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Successors
and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties’ successors and
assigns. Neither CAT nor McDonald’s may assign any rights, or
delegate any obligations, under this Agreement without the prior
written
consent of the other party, and any purported assignment or delegation
will be void without the other party’s prior written consent. A
Party assigning any right, or delegating any obligation, will not
be
released of any liability under this Agreement. Except for
those persons benefited from the Release, nothing contained in this
Agreement shall in any fashion be construed to, or inure to the benefit
of, any person or entity not a party to this Agreement, including,
but not
limited to, the creditors of any of the
Parties.
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N.
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Modifications. No
part or provision of this Agreement may be changed, modified, waived,
discharged or terminated except by an instrument in writing signed
by the
party against whom enforcement of such change, modification, waiver,
discharge or termination is sought. The failure of a party to
seek redress for violation of, or to insist upon strict performance
of,
any provision of this Agreement shall not be a waiver of that provision
by
that party or estop that party from asserting fully any and all of
its
rights under this Agreement.
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O.
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Confidentiality. CAT
agrees, and shall instruct its employees, attorneys and accountants
to
keep the terms and conditions of this Agreement strictly
confidential. McDonald’s agrees, and shall instruct its
employees, accountants, and outside attorneys involved in the resolution
of this matter to keep the terms and conditions of this Agreement
strictly
confidential. The Parties further agree not to provide
originals or copies of, or disclose any or all of the contents of,
this
Agreement to any third-party; provided, however, that (1) originals
or
copies of this Agreement may be produced and its contents shall be
admissible in any dispute between or among any of the Parties, (2)
originals or copies of this Agreement may be produced, and the contents
of
this Agreement may be disclosed, in accordance with an Order entered
by a
court of competent jurisdiction, (3) originals or copies of this
Agreement
may be produced, and the contents of this Agreement may be disclosed,
by
McDonald’s where such production or disclosure is required by statute or
regulation, such as regulations governing Uniform Franchise Offering
Circular disclosures; (4) originals or copies of this Agreement may
be
produced, and the contents of this Agreement may be disclosed, to
attorneys, accountants, and other persons for the purpose of facilitating
accounting or tax advice or services, provided, however, that any
disclosure (other than as set forth above) of the terms and conditions
of
this Agreement by said attorneys, accountants, or other persons shall be
deemed a breach of this Agreement by the party who disclosed the
information to said attorneys, accountants, or other persons and
(5)
McDonald’s may disclose the combined amount of its attorneys’ fees,
defense costs and settlement payment solely for the limited purpose
of
obtaining indemnification. In the event that any Party
reasonably believes that production or disclosure of the contents
of this
Agreement is required by a subpoena or other valid legal process,
it shall
provide written notice to the other Party at least five (5) business
days
prior to the date such production or disclosure is required and shall
cooperate fully with the other Parties in seeking a protective order
to
preserve the confidentiality of this Agreement and its
contents. The Parties agree that, if asked by a third party
about this Agreement or the resolution of their disputes, they shall
state
only that they engaged in constructive discussions about their differences
and reached a mutually satisfactory compromise settlement, or words
to
that effect. The Parties further agree that the CAT Parties may
issue press releases and other public statements reciting that CAT
and
McDonald’s have settled the Lawsuit, with McDonald’s making a monetary
payment to CAT and that McDonald’s has taken a license under the ’859
Patent..
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Settlement
Agreement
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P.
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Further
Assurances. Each of the Parties hereby agrees to
execute such other and further documents, and to take such other
and
further actions, as may be reasonably requested by the other Party
for the
sole purpose of effectuating the agreements herein within ten (10)
business days following written request.
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R.
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Notices. Notices
or requests required or permitted to be given hereunder shall be
deemed
given three (3) business days after being sent via both (a) certified
or
registered United States mail, postage prepaid, or personal delivery
and
(b) facsimile, as follows:
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Settlement
Agreement
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If
to McDonald’s:
XxXxxxxx’x
Corporation
Legal
Department
Litigation
Practice Group
0000
Xxxxx Xxxxxxxxx
Xxx
Xxxxx,
XX 00000
Attn: Xxxxxxx
Xxxx,
Esq.
Fax
No. (000) 000-0000
And
copy to:
Xxxxx
X. Xxxxxxxx, Esq.
Mayer,
Brown, Xxxx & Maw
LLP
00
Xxxxx Xxxxxx Xxxxx
Xxxxxxx,
XX 00000-0000
Fax
No. (000) 000-0000
If
to CAT:
Card
Activation Technologies, Inc.
00
Xxxx
Xxxxxxx Xxxx.
Xxxxx
0000
Xxxxxxx,
XX 00000
And
with copy to:
Orum
& Xxxx LLC
00
Xxxx
Xxxxxxx Xxxx.
Xxxxx
0000
Xxxxxxx,
XX 00000
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S.
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Authorization
to Sign. Each of the Parties hereby represents and
warrants that the individual signing this Agreement on its behalf
is duly
authorized to enter into this Agreement and to execute and legally
bind
such Party to it.
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Settlement
Agreement
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T.
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Counterparts. This
Agreement may be executed in counterparts, each of which shall constitute
an original and all of which when taken together shall constitute
one and
the same instrument.
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U.
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Governing
Law. Illinois law shall govern the interpretation,
construction, and enforcement of this
Agreement.
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IN
WITNESS WHEREOF, XxXxxxxx’x Corporation has executed this Agreement as
of the date set forth below.
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XxXXXXXX’X
CORPORATION,
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a
Delaware corporation
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By: _____________________________________
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Name: __________________________________
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Its: _____________________________________
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The
foregoing Agreement was executed before me in the city/county of ____________,
_____________, ________________, this ___ day of February 2007, by
_______________ in his capacity as ________________ of XxXxxxxx’x
Corporation.
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________________________________
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NOTARY
PUBLIC FOR THE STATE
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OF
ILLINOIS
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MY
COMMISSION EXPIRES:
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__________________________
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Settlement
Agreement
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IN
WITNESS WHEREOF, CAT has executed this Agreement as of the date set
forth below.
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CARD
ACTIVATION TECHNOLOGIES, INC.
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a
Delaware corporation
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By: _____________________________________
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Name: __________________________________
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Its: _____________________________________
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The
foregoing Agreement was executed before me in the city/county of ____________,
_____________, ________________, this ___ day of February 2007, by
_______________ in his capacity as ________________ of Card Activation
Technologies, Inc.
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________________________________
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NOTARY
PUBLIC FOR THE STATE
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OF
ILLINOIS
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MY
COMMISSION EXPIRES:
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__________________________
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Settlement
Agreement
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IN
WITNESS WHEREOF, MedCom has executed this Agreement as of the date set
forth below.
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MEDCOM
USA, INC.
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By: _____________________________________
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Name: __________________________________
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Its: _____________________________________
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The
foregoing Agreement was executed before me in the city/county of ____________,
_____________, ________________, this ___ day of February 2007, by
_______________ in his capacity as ________________ of MedCom USA,
Inc.
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________________________________
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NOTARY
PUBLIC FOR THE STATE
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OF
ILLINOIS
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MY
COMMISSION EXPIRES:
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__________________________
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Settlement Agreement
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