Exhibit 10.14 SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
Date: February 28, 1999
PARTIES:
1. CAE (U.S.) Inc. ("CAE");
2. Ney Technology, Inc. f/k/a Ney Ultrasonics, Inc. ("Ney"); and
3. Xxxxxxxx Group, Inc. ("Xxxxxxxx").
RECITALS:
1. CAE and Ney are currently involved in two lawsuits entitled CAE
(U.S.) Inc. x. Xxx Technology, Inc. f/k/a/ Ney Ultrasonics, Inc., Docket No. CV
98-584215-S, and Ney Technology, Inc. v. CAE (U.S.), Inc., Docket No. CV
98-584249-S, both in the Superior Court, Judicial District of Hartford, at
Hartford ("Lawsuits"). The Lawsuits arise out of claims made by CAE and Ney
relating to the purchase price adjustment provisions of xx.xx. 2.10 and 2.11 of
the Asset Purchase Agreement effective as of February 28, 1998 among CAE, Ney
and Xxxxxxxx. CAE, Ney and Xxxxxxxx deny in their entirety all allegations and
claims made in the Lawsuits.
2. CAE, Ney and Xxxxxxxx desire to avoid the expense, burden, and
diversion of further litigation and desire to fully resolve the claims set forth
in the Lawsuits.
COVENANTS:
1. As part of this Settlement Agreement and Release of Claims, the
parties hereby direct the Escrow Agent, Xxxxxxx, Muething & Xxxxxxx, P.L.L., as
Escrow Agent under the Escrow Agreement dated as of March 4, 1998, among CAE,
Ney and Xxxxxxx, Xxxxxxxx & Xxxxxxx, P.L.L. ("Escrow Agreement"), to distribute
the $500,000.00 deposit held under the Escrow Agreement ("Deposit"), in the
following manner:
1. The sum of $400,000 from the Deposit shall be paid to Ney;
2. The sum of $100,000 from the Deposit shall be paid to CAE;
3. The interest accrued on the Deposit shall be split evenly as of the date
of disbursement, with one-half (1/2) paid to Ney and one-half (1/2) paid to CAE.
2. As further consideration for this Settlement Agreement and Release of All
Claims, the parties hereby amend the Technology Assignment Agreement effective
as of February 28, 1998 and entered into by and among, X.X. Xxx Company,
Xxxxxxxx Group, Inc., CAE, and CAE Blackstone, Inc. ("Technology Assignment
Agreement"). The terms of such amendment shall be as follows: a. CAE represents
that pursuant to the Technology Assignment Agreement there is an outstanding
balance of Forty-Seven Thousand Eight Hundred Seventy-Nine and 96/100 Dollars
($47,879.96) as of December 25, 1998 in accrued but unpaid payments due from
CAE, pursuant to Article 4 and Article 5 of the Technology License Agreement as
payments for Payment Bearing Transducers and Category I Products, as both terms
are defined in the Technology License Agreement. The parties agree that one-half
(1/2) of this amount, or Twenty-Three Thousand Nine Hundred Thirty-Nine and
98/100 Dollars ($23,939.98) shall be paid by CAE to Ney on the date of this
Settlement Agreement, and no further payments shall be required from CAE as to
such outstanding balance due under the Technology Assignment Agreement, subject
to Ney's right of inspection and audit under Article 6 and the parties' rights
and obligations regarding dispute resolution under Article 10 of such agreement.
b. After the date of this Settlement Agreement and
Release of Claims, payments due from CAE to Ney under
Article 4 and Article 5 shall be applied as follows:
1) On each payment due from CAE to Ney pursuant
to Articles 4 and 5 of the Technology
Agreement, CAE shall pay one-half (1/2) of
the actual payments due until a total of Two
Hundred Thousand Dollars ($200,000.00) of
deductions from the calculated payments due
from CAE under Articles 4 and 5 (the Payment
Bearing Transducers, Category I Products and
the Category II Products), in the aggregate,
has been achieved. Thereafter, the full
payment by CAE shall be resumed in
accordance with the terms of the Technology
Assignment Agreement, including the
Applicable Payment Period as defined in the
Technology Assignment Agreement without
reference to the modification provided
herein, except for the reduction in the cap
as set forth below at Subsection b.3.
2) The fifty percent (50%) reduced payment made
by CAE as set forth in subsection a above
shall be applied towards the aggregate
reduction of Two Hundred Thousand Dollars
($200,000.00), referenced at subsection b.1)
above.
3) Paragraph 4.2(c) of the Technology License
Agreement shall be amended so that the
maximum cumulative payment due under Article
4 of the Technology Assignment Agreement
shall be One Million Nine Hundred Thousand
Dollars ($1,900,000.00).
c. Notwithstanding the fifty percent (50%) reduced
payments due from CAE under the Technology Assignment
Agreement as amended in accordance with subsection a.
and subsection b. of this Paragraph 2, the full
amount of the payments that would have been made for
Payment-Bearing Transducers under Article 4 will be
credited towards the maximum cumulative payment of
One Million Nine Hundred Thousand Dollars
($1,900,000.00), as if the full payment had been
made. (See attachment "A" for the numerical
reconciliation of the above sections 2(a) through
2(c).)
d. By way of example, assume that (i) the payment
obligation arising under the Technology Assignment
Agreement based on of sales of Products during the
first quarter of 1999 (including sales of Payment
Bearing Transducers under Article 4, and sales of
Other Payment-Bearing Products under Article 5) is
$50,000. Assume that this amount consists of $24,000
due under Article 4 and $26,000 due under Article 5.
Assume for purposes of this example that no other
payments have been credited toward the cumulative
$200,000 deduction due under this Settlement
Agreement on amounts otherwise due under the
Technology Assignment Agreement.
In this example, CAE (Assignee) will pay to Ney
(Assignor) a total of $25,000 consisting of $12,000
under Article 4, and $13,000 under Article 5. CAE's
payment of $25,000 will be credited towards the
$200,000 cumulative deduction, leaving $175,000
remaining to be deducted from payments by CAE
otherwise due under the Technology Assignment
Agreement. However, although only $25,000 is paid by
CAE in this example, CAE's payment obligation of
$50,000 on account of the first quarter sales of 1999
Payment-Bearing Products will be considered fully
satisfied. Finally, although only $12,000 is paid by
CAE under Article 4, $24,000 will be credited towards
the $1.9 million cumulative cap on Article 4
payments, leaving $1,822,355.00 (after applying prior
period payments and credit against the cap).
This same method shall apply to all subsequent
quarters until the $200,000 deduction has been
satisfied, and at that time the remaining total
obligation of the Payment Bearing Transducers cap
under Article 4 will be established for further
calculation as originally set forth in the Technology
Assignment Agreement. (See attachment "B" for
numerical calculation of example assumed in section
2(d) above).
e. The Technology Assignment Agreement is further amended as follows:
(1) Exhibit D to the Technology Assignment Agreement, as referenced in
Section 6.1 thereof, is attached to this Agreement and incorporated by reference
in the Technology Assignment Agreement.
2) Section 8.1(a) of the Technology Assignment Agreement (at page 14) is
amended so that the word "Assignor" is changed to "Assignee" in the last line
thereof.
f. The provisions in this Section 2 shall be an
amendment to the Technology Assignment Agreement
pursuant to Section 10.5 of the Technology Assignment
Agreement and the signatures of Ney, CAE, Xxxxxxxx,
the X.X. Xxx Company, and CAE Blackstone, Inc. below
shall serve as written agreement by these parties to
the amendments to the Technology Assignment Agreement
set forth in this Section 2. Except as provided
above, all of the other terms and conditions of the
Technology Assignment Agreement shall remain in full
force and effect and shall not be modified hereby.
3. For and in consideration of the mutual promises and covenants
contained in the foregoing paragraphs, the sufficiency of which is hereby
acknowledged, CAE for itself and its present and former owners, stockholders,
directors, officers, employees, subsidiaries, parent corporations, divisions,
affiliates, agents, representatives, assigns, predecessors, successors, insurers
and attorneys, do hereby fully and forever release, hold harmless and discharge
Ney and Xxxxxxxx and their present and former owners, stockholders, directors,
officers, employees, subsidiaries, parent corporations, divisions, affiliates,
agents, representatives, assigns, predecessors, successors, insurers and
attorneys, from any and all claims, demands, causes of action, or suits, arising
out of or related to the claims made by CAE in the Lawsuits, or other sums of
money, grievances, expenses, demands, controversies of every kind and
description, whether liquidated or unliquidated, known or unknown, contingent or
otherwise, and whether specifically mentioned or not, that CAE now has or has
had or which may exist or might be claimed to exist at or prior to the date of
this Agreement relating to the purchase price adjustment provisions of the Asset
Purchase Agreement contained in xx.xx. 2.10 and 2.11 of the Asset Purchase
Agreement.
4. For and in consideration of the mutual promises and covenants
contained in the foregoing paragraphs, the sufficiency of which is hereby
acknowledged, Ney and Xxxxxxxx for themselves and their present and former
owners, stockholders, directors, officers, employees, subsidiaries, parent
corporations, divisions, affiliates, agents, representatives, assigns,
predecessors, successors, insurers and attorneys, do hereby fully and forever
release, hold harmless and discharge CAE and its present and former owners,
stockholders, directors, officers, employees, subsidiaries, parent corporations,
divisions, affiliates, agents, representatives, assigns, predecessors,
successors, insurers and attorneys, from any and all claims, demands, causes of
action, or suits, arising out of or related to the claims made by Ney and
Xxxxxxxx in the Lawsuits, or other sums of money, grievances, expenses, demands,
controversies of every kind and description, whether liquidated or unliquidated,
known or unknown, contingent or otherwise, and whether specifically mentioned or
not, that Ney and Xxxxxxxx now have or have had or which may exist or might be
claimed to exist at or prior to the date of this Agreement relating to the
purchase price adjustment provisions of the Asset Purchase Agreement contained
in xx.xx. 2.10 and 2.11 of the Asset Purchase Agreement.
5. CAE, Ney and Xxxxxxxx further stipulate and agree that the terms,
amount, and the fact of this Agreement are to be kept confidential, and will not
hereafter disclose any information concerning this Agreement to any persons,
firm, coalition, governmental agency or other entity without the prior written
consent of each and every party, except as may become necessary to file income
tax returns, satisfy specific reporting obligations under applicable securities
laws, keep related financial records, consult with legal counsel or to comply
with any court order, subpoena, or at the direction of a court, administrative
agency, or legislative body. If otherwise asked about, or commenting on the
matter, the parties will state that the Lawsuits were amicably settled or
resolved, and will state nothing further about the Lawsuits or this Agreement.
6. CAE and Ney agree that their counsel shall execute withdrawals of the
Lawsuits, with prejudice, all parties to bear their own costs and attorneys'
fees.
7. The undersigned parties hereby declare that they completely read, fully
understood, and voluntarily accepted the terms of this Agreement for the purpose
of making a full and final compromise, adjustment, and settlement among
themselves of any and all claims or disputes arising from the Lawsuits and as
otherwise described in paragraphs 3 and 4 above.
8. This Agreement includes the entire transaction between the parties
hereto and there are no representations, warranties, covenants or conditions
except as specified and referenced in this Agreement.
9. This Agreement shall be binding upon and enure to the benefit of the
parties, their successors and assigns.
10. This Agreement shall be governed by, construed, and interpreted in
accordance with the laws of the State of Connecticut. Any dispute relating to
this Agreement shall be brought in the state or federal courts sitting in the
State of Connecticut.
CAE (U.S.) INC.
BY: -----------------------------
Title
NEY TECHNOLOGY, INC. f/k/a NEY ULTRASONICS, INC.
BY: -----------------------------
Title
XXXXXXXX GROUP, INC.
BY: -----------------------------
Title
The following parties' signatures constitute consent to the amendments
to the Technology Assignment Agreement set forth in paragraph 2 of the
Covenants.
THE X.X. XXX COMPANY
BY: ------------------------------
Title
CAE BLACKSTONE, INC.
BY: -----------------------------
Title
