SETTLEMENT AGREEMENT AND RELEASE
Exhibit
10.45
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (“Agreement”) is entered into by and among Synapse Fund
I, LLC and Synapse Fund II, LLC (collectively, “Synapse”), Go Industries, Inc., Xxxxxxx X. Xxxxxxx,
Xxxxxx Xxxxx, Xxxxxx X. Xxxxx, Xxxx Xxxxxxxx Xxxxx, Belinfer Corporation, Xxxx X. Xxxx, Xxxxxxx
Living Trust, Xxxx Xxxxxxx, Xxxxxx X. Xxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx X. Xxxxx, Xxxxx
Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxx X. Xxxxx, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx
Xxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxx X. Xxxxxxx Grantor Retained
Interest Trust, Xxxx Xxxxx Connor, and Xxxx X. Xxxxxx Family LTD. Partnership (collectively with
Synapse, “Plaintiffs”), Sutura, Inc. (“Sutura”), Xxxxxxx X. Xxxxxx, Xxxxxx Xxxxxx, and Xxxxxx
Xxxxxxxx (collectively with Plaintiffs and Sutura, the “Parties”).
RECITALS
A. On June 30, 2005, Plaintiffs filed their Complaint for Involuntary Dissolution; Removal of
Directors, and Injunctive Relief against Xxxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxx, and Sutura in the case
entitled Go Industries, Inc., et al. v. Xxxxxxx X. Xxxxxx, et al., Orange County Superior
Court, Case No. 05 CC00137 (the “Dissolution Action”).
B. On June 30, 2005, Synapse filed its related Shareholder Derivative Complaint for: (1)
Breach of Fiduciary Duty; (2) Misappropriation of Corporate Funds; (3) Accounting; (4) Imposition
of Constructive Trust; (5) Injunctive Relief; and (6) Unjust Enrichment against Xxxxxxx X. Xxxxxx,
Xxxxxx Xxxxxxxx, and Sutura in the
case entitled Synapse Fund I, LLC, etc. vs. Xxxxxxx X. Xxxxxx, et al., Orange County
Superior Court, Case No. 05 CC00136 (the “Derivative Action”).
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C. Both the Dissolution Action and the Derivative Action are currently assigned to the
Xxxxxxxxx Xxxxxxx X. Xxxxx in Dept. CX 104 of the Orange County Superior Court.
D. The Parties now desire to settle their disputes and avoid the further cost, time, and
burden associated with the Dissolution Action and the Derivative Action by entering into this
Agreement.
NOW, THEREFORE, the Parties agree as follows:
1. Court Approval. This Agreement shall be contingent upon court approval. The
Parties agree to do everything reasonably necessary to obtain court approval and support of the
shareholders of Sutura for this Agreement. Within 10 business days of the full execution of this
Agreement, Sutura shall file in the Derivative Action a motion for approval of this Agreement.
Sutura shall mail notice of the hearing on the motion for approval to each of its shareholders at
least twenty-six (26) days before the hearing. The notice shall inform the shareholders of their
opportunity to object to this Agreement and file a motion with the court to intervene as a
plaintiff, either on the shareholder’s own behalf, or on behalf of Sutura, Inc in the Derivative
Action. In the event that a shareholder is permitted to intervene in the Derivative Action, or the
court does not grant the motion for approval, this Agreement shall become voidable upon written
notice by any party mailed to all other parties within ten (10) days after such party receives
notice of the entry of the court’s order upon the motion to intervene or the motion seeking
approval.
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2. Consideration.
(a) Within 10 business days of the entry of the court’s order approving this Agreement, Sutura
will deliver to Synapse, via Plaintiffs’ counsel, Xxxxx X. Xxxxxxxx, a fully executed convertible
note for $400,000.00 in the form attached to this Agreement as Exhibit A. At the same time the
parties shall exchange executed copies of the Fifth Amended Security Agreement, in the form
attached as Exhibit B, the Fifth Amended Patent Security Agreement, in the form attached as Exhibit
C, and the Fifth Amended Registration Rights Agreement, in the form attached as Exhibit D.
(b) Concurrently with the delivery of the note referred to in paragraph 2(a) above,
Plaintiffs’ counsel shall execute and deliver to counsel for Sutura, Xxxxxxx X. X’Xxxx, for filing
with the court requests for dismissal with prejudice of both the Derivative Action and the
Dissolution Action.
(c) Effective upon Plaintiffs’ dismissal with prejudice of both the Derivative Action and the
Dissolution Action, Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxxxxx agree that Xxxxxxx X. Xxxxxx and Xxxxxx
Xxxxxxxx shall not again serve as CEO and CFO, respectively, of Sutura until the earlier of August
1, 2008, or a sale or change of control of Sutura. For purposes of this paragraph 2(c), a sale or
change of control of Sutura will be deemed to occur upon (A) the acquisition of Sutura by another
entity by means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation, but excluding any merger effected
exclusively for the purpose of changing the domicile of the corporation) or (B) a sale of all or
substantially all of the assets of the corporation; unless in each of the foregoing clauses (A) and
(B), the corporation’s shareholders of record as constituted
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immediately prior to such transaction(s), acquisition or sale will, immediately after such
transaction(s), acquisition or sale (by virtue of securities issued as consideration for the
corporation’s transaction(s), acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
3. Discharge, Release, and Covenant Not to Xxx.
(a) Each of the Parties, for themselves, derivatively on behalf of Sutura, and for their
respective heirs, executors, administrators, representatives, trustees, agents, principals,
shareholders, servants, employees, attorneys, insurers, predecessors and successors in interest,
assigns, directors, officers, members, managers, partners, parent corporations, subsidiaries,
affiliates, and all other persons, firms, or corporations with whom or which any of them have been,
are now, or may hereafter be affiliated, and any other person or entity claiming through them or on
their behalf, hereby discharge, release, and covenant not to xxx any of the other Parties as well
as their respective heirs, executors, administrators, representatives, trustees, agents,
principals, shareholders, servants, employees, attorneys, insurers, predecessors and successors in
interest, assigns, directors, officers, members, managers, partners, parent corporations,
subsidiaries, affiliates, and all other persons, firms, or corporations with whom or which any of
them have been, are now, or may hereafter be affiliated, and any other person or entity acting on
their behalf, for any claims, causes of action, losses, and liabilities, of any nature whatsoever,
whether known or unknown, and whether arising under statute, contract (express, implied, or
otherwise), in tort, equity, or any other theory of recovery, and whether for compensatory damages,
penalty, or punitive damages, which any party now has or may hereafter accrue or otherwise acquire,
in any
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way relating to or arising out of the Derivative Action, the Dissolution Action, the events
and facts giving rise to the Derivative Action or the Dissolution Action or which could have been
brought in the Derivative Action or the Dissolution Action.
(b) The Parties expressly waive all rights under Section 1542 of the Civil Code of the State
of California. Said section of the Civil Code 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.
4. No Admission of Merits. The Parties agree and acknowledge that the sums and other
consideration specified in this Agreement are given as a full and complete compromise of matters
involving disputed issues; that neither payment of the sums or other consideration, nor the
negotiations for this Agreement shall be considered admissions; and that no past or present
wrongdoing or liability on the part of any party shall be implied by such payment or negotiations.
5. Announcement of Settlement. The Parties agree that this settlement will be
announced by Sutura by way of a press release, substantially in the form attached to this Agreement
as Exhibit B. Sutura agrees to consult with Plaintiffs on any changes or additions to such press
release, but the timing of issuance of the press release, and the determination of the need or
content of any further announcement or disclosure shall be made by Sutura’s corporate counsel.
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6. Attorneys Fees. In the event that any action is brought by any party to interpret
or enforce the terms of this Agreement, the prevailing party or parties shall be entitled to
reasonable attorneys’ fees and costs in addition to all other relief to which that party or those
parties may be entitled.
7. Successors. This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective heirs, executors, administrators, representatives, trustees, agents,
servants, employees, attorneys, insurers, predecessors and successors in interest, assigns,
directors, officers, members, managers, partners, managers, members, parent corporations,
subsidiaries, affiliates, and all other persons, firms, or corporations with whom or which any of
them have been, are now, or may hereafter be affiliated.
8. Controlling Law. This Agreement shall be interpreted in accordance with and
governed in all respects by the laws of the State of California.
9. Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this Agreement, such
provision shall be fully severable. In lieu thereof, there shall be added a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid
and enforceable.
10. Fair Interpretation. This Agreement is the product of negotiations between the
Parties and their respective attorneys, and shall be given fair interpretation. Each of the
Parties expressly acknowledges and agrees that this Agreement shall be deemed to have been mutually
prepared so that the rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
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11. Parties Advised by Counsel. The Parties represent and warrant to each other that
they have been represented by counsel with respect to this Agreement and all matters covered by and
relating to it, that they have been fully advised by such counsel with respect to their rights and
with respect to the execution of this Agreement, and that such counsel are authorized and directed
to take all action necessary to effect the purposes of this Agreement.
12. Entire Agreement. This Agreement constitutes the entire agreement among the
Parties, and it is expressly understood and agreed that this Agreement may not be altered, amended,
modified, or otherwise changed in any respect or particular whatsoever, except by a writing duly
executed by the Parties, or their authorized representatives, and the Parties, and each of them,
acknowledge and agree that none of them will make any claim at any time or place that this
Agreement has been orally altered or modified in any respect whatsoever.
13. Authority to Enter Into Agreement. Each individual executing this Agreement on
behalf of any party represents and warrants to the other Parties that such individual is authorized
to enter into this Agreement on behalf of that party and that this Agreement binds that party.
14. Counterparts. This Agreement may be executed by fax signature and in one or more
counterparts, each of which shall constitute a duplicate original.
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15. Effective Date. This Agreement shall not be binding or of any force or effect
unless and until it is executed by all Parties. The effective date of this Agreement shall be the
date it becomes executed by all Parties.
16. Cooperation. All Parties agree to cooperate fully and execute any and all
supplementary documents and to take all additional actions which may be necessary or appropriate to
give full force and effect to the basic terms and intent of this Agreement.
17. Authority. The Agreement when executed and delivered by the Parties shall
constitute the legal, valid and binding obligation of the Parties in accordance with the terms
hereof. The execution, delivery and performance of the Parties of or under the Agreement is within
the power of the Parties and have been duly authorized by their management as required by, as
applicable, their articles of incorporation, bylaws, other governing instruments and applicable
law.
| Synapse Fund I, LLC | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
| Synapse Fund II, LLC | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
| Go Industries, Inc. | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
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Dated: March ___, 2007 |
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| Xxxxxxx X. Xxxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx Xxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx X. Xxxxx | ||||||
| Belinfer Corporation | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
Dated: March ___, 2007 |
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| Xxxx X. Xxxx | ||||||
| Xxxxxxx Living Trust | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
Dated: March ___, 2007 |
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| Xxxx Xxxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx X. Xxxx | ||||||
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Dated: March ___, 2007 |
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| Xxxx Xxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx Xxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx X. Xxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxx Xxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxx X. Xxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxx X. Xxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxx X. Xxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx X. Xxxxxx | ||||||
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Dated: March ___, 2007 |
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| Xxxxxx Xxxxx Xxxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxx X. Xxxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxx Xxxxxxx | ||||||
| Xxxxxx X. Xxxxxxx Grantor Retainer Interest Trust | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
Dated: March ___, 2007 |
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| Xxxx Xxxxx Xxxxxx | ||||||
| Xxxx X. Xxxxxx Family LTD. Partnership | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
| Sutura, Inc. | ||||||
Dated: March ___, 2007 |
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| By: | ||||||
| Its: | ||||||
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Dated: March ___, 2007 |
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| Xxxxxxx X. Xxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx Xxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxxxx Xxxxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxx Xxxxxx | ||||||
Dated: March ___, 2007 |
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| Xxxx Xxxxxxxx Xxxxx | ||||||
Dated: April ___, 2007 |
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| Xxxxxxx X. Xxxxx | ||||||
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Approved: |
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| LAW OFFICES OF XXXXX X. XXXXXXXX | ||||||
Dated: April ___, 2007 |
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| By: | ||||||
| Xxxxx X. Xxxxxxxx | ||||||
| Attorneys for Synapse Fund I, LLC | ||||||
| and Synapse Fund II, LLC | ||||||
| SAMUELS, GREEN, STEEL & XXXXX, LLP |
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Dated: April ___, 2007 |
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| By: | ||||||
| Xxxx X. Xxxxxxxx | ||||||
| Attorneys for Go Industries, Inc., Xxxxxxx X. | ||||||
| Xxxxxxx, Xxxxxx Xxxxx, Xxxxxx X. Xxxxx, Xxxx | ||||||
| Xxxxxxxx Xxxxx, Belinfer Corporation, Xxxx X. | ||||||
| Xxxx, Xxxxxxx Living Trust, Xxxx Xxxxxxx, | ||||||
| Xxxxxx X. Xxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx | ||||||
| X. Xxxxx, Xxxxx Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. | ||||||
| Xxxxx, Xxxx X. Xxxxx, Xxxx X. Xxxxxx, Xxxxxx X. | ||||||
| Xxxxxx, Xxxxxx Xxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, | ||||||
| Xxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxx X. Xxxxxxx | ||||||
| Grantor Retained Interest Trust, Xxxx Xxxxx | ||||||
| Connor, and Xxxx X. Xxxxxx Family LTD. Partnership | ||||||
| XXXXX & XXXXXX l.l.p. | ||||||
Dated: April ___, 2007 |
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| By: | ||||||
| Xxxxxxx X. X’Xxxx | ||||||
| Attorneys for Sutura, Inc. | ||||||
| XxXXX & ASSOCIATES | ||||||
Dated: April ___, 2007 |
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| By: | ||||||
| Xxxxx X. XxXxx | ||||||
| Attorneys for Xxxxxxx Xxxxxx, | ||||||
| Xxxxxx Xxxxxx, and Xxxxxx Xxxxxxxx | ||||||
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