Exhibit 10.7
Final Version
SETTLEMENT AGREEMENT
by and between
1. CRL Systems Inc., a Nevada corporation with its principal place of business
at 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, XXX,
- hereinafter "CS" -
and
2. Xxxxxxx Xxxxxx Xxxxxxxxxxx, 0000 Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, XXX,
- hereinafter "Xxx Xxxxxxxxxxx" -
and
3. Solectron GmbH, a German limited liability company, Xxxxxxxxxxxx. 0, 00000
Xxxxxxxxxx, Xxxxxxx,
- hereinafter "Solectron" -
PREAMBLE
A. Solectron and Dialog4 System Engineering GmbH- a German limited liability
company, Xxxxxxxxxxx. 00, 00000 Xxxxxxxxxxx, Xxxxxxx ("Dialog4") entered into a
material liability agreement dated May 5, 2000 (the "Material Liability
Agreement") pursuant to which Dialog4 (i) commissioned Solectron with the
acquirement of materials required for the future production of products by
Solectron and (ii) undertook to pay for the materials purchased by Solectron.
Furthermore, Solectron and Dialog4 entered into the agreement dated November 30,
2000 which is attached hereto as Exhibit (the "Material Liability Settlement
Agreement") and pursuant to which Solectron and Dialog4 agreed (i) to
discontinue the intended cooperation for the production of the so-called
sountainer product and (ii) how the rights and obligations of Solectron and
Dialog4 under the Material liability Agreement shall be settled.
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B. Dialog4 and CS entered into an asset sale and purchase agreement dated
January 1, 2002 (the "Asset Sale and Purchase Agreement") pursuant to which CS
acquired from Dialog4 its business of developing, manufacturing or causing the
manufacture of, and marketing of audio products, including Codecs (the
"Business") by acquiring basically all of the assets used in connection with the
Business and by assuming certain Business related agreements.
C. In January 2002 CS informed Solectron about the Asset Sale and Purchase
Agreement between Dialog4 and CS. Thereafter CS and Solectron were in the
process of negotiating a Manufacturing Agreement regarding the
sountainer-product, which was not signed by either party.
D. It is in dispute between CS, Dialog4 and Solectron whether CS and Dialog4
agreed under the Asset Sale and Purchase Agreement that CS shall assume from
Dialog4 the Material Liability Agreement and the Material Liability Settlement
Agreement. Dialog4 and Solectron alleged that CS assumed the Material Liability
Agreement and Material Liability Settlement Agreement and thereby have become
the contractual partner of Solectron under these two agreements, whereas CS
alleged that it did not undertake to assume the Material Liability Agreement and
Material Liability Settlement Agreement.
E. Solectron filed an application for a writ of attachment (dinglicher Arrest)
and levy of attachment (Arrestpfandung) against CS with the Regional Court
(Landgericht) Stuttgart. On July 18, 2002, the Regional Court (Landgericht)
Stuttgart, case no. (Geschaftsnummer) 36 0 117/02 KfH, issued the writ of
attachment with respect to the assets of CS (dinglicher Arrest uber das Vermogen
der CS) and the levy of attachment (Pfandung) with respect to certain purported
claims of CS against other parties (the "Court Order").
F. CS intends to acquire from Solectron the material which Solectron undertook
to deliver to Dialog4 under the Material Liability Settlement Agreement and,
therefore, CS is prepared to pay to Solectron as purchase price the amounts
provided for in the Material Liability Settlement Agreement.
In consideration of the foregoing, the Parties agree as follows:
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Article I
Acceptance of Liabilities
Notwithstanding CS's continued different opinion vis-A-vis Dialog4 that CS did
not assume Dialog4's liabilities and obligations under the Material Liability
Agreement and the Material Liability Settlement Agreement, CS hereby accepts
vis-a- vis Solectron to be fully liable for Dialog4's obligations under the
Material Liability Agreement and the Material Liability Settlement Agreement,
however, for the avoidance of doubt, CS and Solectron agree that this acceptance
shall not release Dialog4 from its obligations vis-A-vis Solectron under the
Material Liability Agreement and the Material Liability Settlement Agreement.
Article 2
Sale and Purchase of Material
2.1 CS hereby purchases from Solectron and Solectron hereby sells to CS all
materials and prototypes which Solectron undertook to deliver to Dialog4
under the Material Liability Settlement Agreement (together "Sold Assets").
2.2 The purchase price for the Sold Assets shall amount to USD829,327.82 and
shall be paid by CS to Solectron in monthly installments as follows:
CS shall pay 23 monthly installments of USD34,555.33, on the 15th Day of
each month, beginning with August 15th, 2002.
30 days after the 23rd installment CS shall make a final payment of all
outstanding amounts (i.e. one final installment of USD34,555.33 plus
interest and legal fees).
Each installment shall be due and payable on the 15th day of each month and
shall be paid to the following bank account of Solectron:
Commerzbank Stuttgart [account number omitted]
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2.3 The Sold Assets shall be delivered by Solectron to the German branch of CS,
Xxxxx Europe, Businesspark, Xxxxxxxxxxx. 00, 00000 Xxxxxxxxxxx, Xxxxxxx,
without undue delay after Solectron received the first installment of the
purchase price (being due and payable on August 15, 2002). CS is aware that
some of the Sold Assets (here: the Displays) are still being stored at the
facilities of the Asian supplier (ALPS) of Solectron. Solectron will
instruct ALPS to ship the products as soon as possible to the CS- address
mentioned before.
2.4 Each installment of the purchase price other than the first installment
(being due and payable on August 15, 2002) shall bear interest as from
August 15, 2002. The interest rate shall be the then relevant interest
rate of the European Centralbank (Hauptrefinanzierungssatz der EZB,
presently 3.25%) plus an uplift of 3 % (totalling presently 6.25%); such
interest to be paid together with each installment.
2.5 Should CS be in default (Verzug) with more than one purchase price
installment by more than 10 working days, Solectron may request that the
aggregate of the unpaid installments plus interest shall fall due
immediately and be settled in toto within an appropriate time limit to be
set by Solectron in writing, such time limit being, however, not shorter
than another 10 working days.
2.6 Solectron hereby assigns to CS, who accepts such assignment, all its rights
and claims against other parties because of any defect of the Sold Assets,
if any, in particular, any rights and claims, if any, against the
respective suppliers of Solectron. Solectron does not undertake any
warranty vis-a-vis CS for the Sold Assets.
-5-
Article 3
Assignment of Rights and Indemnification (Freistellung)
from Liabilities under the Material Liability Settlement Agreement
3.1 Solectron hereby assigns to CS, who accepts such assignment, all rights and
claims of Solectron against Dialog4 under the Material Liability Agreement
and the Material Liability Settlement Agreement, if any.
3.2 CS shall indemnify (freistellen) Solectron from all liabilities vis-a-vis
Dialog4 under the Material Liability Agreement and the Material Liability
Settlement Agreement, if any.
Article 4
Cancellation of Court Order and Enforcement Measures
4.1 Immediately after Solectron has received the first installment (see Article
2.2 before) the following shall apply:
4.2 Solectron shall make no further use of the Court Order, shall without undue
delay take all measures to cancel the Court Order and shall without undue
delay hand over to CS all official copies of the Court Order which can be
used for enforcement measures. Furthermore, Solectron hereby waives all
rights vis-a-vis CS under the Court Order and resulting from the
enforcement of the Court Order, including, without being limited to, the
pledges (Pfandrechte) with respect to the purported claims of CS against
Kreissparkasse Ludwigsburg, Audio Export Xxxxx Xxxxxxx & Co. GmbH, Dialog4
Systems Engineering GmbH and Finanzamt Ludwigsburg set forth in the Court
Order and hereby undertakes to inform these debtors of CS about such waiver
in due form and without undue delay.
4.2 CS shall pay to Solectron
(i) statutory court fees incurred for the Court Order (including the
charges for the execution of the Court Order); the parties agree that
these fees amount EUR3,335.00 (three-thousand three-hundred and
thirty- five Euro), and
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(ii) lawyers fees under the statutory fee scheme
(Bundesrechtsanwaltgeuhrenordnung) incurred for the application to
issue and execute the Court Order; the parties agree that these fees
amount to EUR4,072 (four- thousand and seventy-two Euro) (including
VAT);
(these court fees and lawyers fees together the "Legal Fees").
The Legal Fees shall be due and payable one month after the last purchase
price installment under Article 2.2 or in case the aggregate of the unpaid
purchase price installments have become due and payable in toto pursuant to
Article 2.5 together with this aggregate amount.
Article 5
Guarantee of Xxx Xxxxxxxxxxx
Xxx Xxxxxxxxxxx hereby guarantees unconditionally and irrevocably vis-a-vis
Solectron by way of an independent guarantee (selbstandiges Garantieversprechen)
that CS will perform its payment obligations under this Agreement.
Accordingly Xxx Xxxxxxxxxxx hereby guarantees to pay promptly - without offset,
credit or deduction of any kind and regardless of any objections from CS - upon
receipt of Solectron's first written demand certifying that CS has failed to
fulfil his payment obligations on the due dates, any sum which is or may fall
due to Solectron under this Agreement.
In the event that any provision in this Guarantee shall be construed by the
relevant arbitrator (see Article 6.5 below) to be unlawful or unenforceable and
if the offending provision can be reformed to effect the clear intention of the
parties herein, then, the offending provision shall be so reformed, and the
remainder of the Guarantee shall remain in full force and effect as written. If
the provision cannot be reformed to affect the clear intention of the parties
hereto, then, this Guarantee shall be deemed to be reformed to exist as now
written but without the offending provision.
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Article 6
Miscellaneous
6.1 This Agreement is subject to the laws of Germany. Terms to which a German
translation has been added shall be interpreted throughout the Agreement in
the meaning assigned to the German translation.
6.2 Amendment and additions to this Agreement including any amendment of this
Article 6.2 are only valid if they have been made in writing and if any
such amendment or additions expressly state that this Agreement is being
amended or changed thereby.
6.3 Should any provision of this Agreement, or any provision to be incorporated
in the future, be or become invalid or unenforceable, the validity of the
other parts of this Agreement shall not be affected hereby. The same
applies if this Agreement contains any omissions. In lieu of the invalid
or unenforceable provision or in order to complete any omission, a fair
provision shall apply which, to the extent legally permissible, comes as
close as possible to what the Parties had intended or would have intended,
according to the spirit and purpose of the Agreement if they had considered
the matter at the time this Agreement was executed. The same applies if
the provision is invalid because of the stipulated scope of time period.
6.4 Except as provided in Article 4.2, each Party shall bear the costs of its
own legal advisors.
6.5 All disputes arising in connection with this Agreement shall be finally
settled under the Rules of Conciliation and Arbitration of the Deutsche
Institut fur Schiedsgerichtsbarkeit e. V. (German Institution for
Arbitration) by one arbitrator appointed in accordance with such rules.
The arbitrator shall be eligible for the office of a judge in the Federal
Republic of Germany. The place of arbitration shall be Stuttgart, Germany.
The language of the arbitration shall be English; a Party wishing to
produce a document in either German or English shall not be required to
produce a translation thereof.
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If the decision of the arbitrator is not enforceable in the United States,
especially with regard to guarantee of Xxx Xxxxxxxxxxx, Solectron is
entitled to get any dispute arising in connection with this agreement filed
with and settled by the relevant Civil Court in Stuttgart.
Tempe, Arizona, August 06, 2002 /s/ Xxxxxxx Xxxxxx Xxxxxxxxxxx
--------------------------------- -----------------------------------
Place, date CRL Systems Inc.
by: Xxxxxxx Xxxxxx Xxxxxxxxxxx
President
Tempe, Arizona, August 06, 2002 /s/ Xxxxxxx Xxxxxx Xxxxxxxxxxx
--------------------------------- -----------------------------------
Place, date Xxxxxxx Xxxxxx Xxxxxxxxxxx
Herrenberg, Germany, August 09, 2002 /s/ Xxxxxx Xxxxxxxx
--------------------------------- -----------------------------------
Place, date Solectron GmbH
by: Xxxxxx Xxxxxxxx
General Manager /
Geschlaftsfuhrer
