MUTUAL RELEASE AND SETTLEMENT AGREEMENT
I. PARTIES
This Mutual Release and Settlement Agreement ("Agreement") is made by and
between XXXXXX XXXXX & XXXXX LLP, ("PMP") and VERTICAL COMPUTER SYSTEMS, INC.
"VERTICAL"). The effective date of this Agreement is October 19, 2005
II. RECITALS
A. On or about January 21, 2005, PMP filed a lawsuit in the Los Angeles
County Superior Court, entitled Xxxxxx Xxxxx & Xxxxx LLP vs. Vertical Computer
Systems, Inc. Case No. BC327609 (the "Action"). PMP alleged causes of action
for: (1) Breach of Written Contract; (2) Account Stated; (3) Reasonable Value
for Services Rendered; and (4) Breach of Promissory Note.
B. On April 20, 2005, VERTICAL answered PMP'S Complaint in the Action,
denying any liability and disputing its obligation to pay the amounts alleged.
C. It is now the desire of PMP and VERTICAL to fully and finally resolve
and settle their differences and disputes pertaining to the Action.
III. TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the promises and covenants contained
herein, it is agreed by and between the parties as follows:
A. CONSIDERATION. VERTICAL agrees execute and deliver to PMP a fully
executed Promissory Note ("Note") in the form attached hereto as Exhibit "A."
Concurrently with VERTICAL'S delivery to PMP of the fully executed Note, PMP
will deliver to VERTICAL a fully executed Request for Dismissal, with prejudice,
of the Action.
C. MUTUAL GENERAL RELEASE.
For valuable consideration stated herein and above, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree to mutually
release one another with respect to the Action, as set forth herein below;
PROVIDED HOWEVER, that no provision of this Mutual Release and Settlement
Agreement shall, or be otherwise interpreted to, extend to the terms of this
Agreement and/or of the Note.
(1) Plaintiff PMP, on behalf itself, its agents, employees, partners
and attorneys of record in the Action hereby fully and forever, generally
and specifically, releases and discharges VERTICAL, and its respective
past and present agents, employees, officers, directors, shareholders and
attorneys (the "Vertical Releasees") from any and all claims, demands,
actions, rights, causes of action, obligations, liens, damages, judgments,
indemnities, subrogations, duties, controversies or any liability or claim
of any nature, character or description, whether at law or in equity,
whether or not now known, suspected or claimed, that PMP has ever had or
now have or might in the future have, against the Vertical Releasees by
reason of any act, failure to act, cause, matter or event arising out of,
or in any way relating to the subject matter of and/or the facts and
transactions alleged in the Action or any and all other damages or injury
of any nature whatsoever, past, present and future, in any way related to
the Action;
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(2) The Vertical Releasees, hereby fully and forever, generally and
specifically, release and discharge PMP and its respective past and
present agents, employees, partners, and attorneys of record in the Action
(the "PMP Releasees") from any and all claims, demands, actions, rights,
causes of action, obligations, liens, damages, judgments, indemnities,
duties, controversies or any liability or claim of any nature, character
or description, whether at law or in equity, whether or not now known,
suspected or claimed, that have ever had or now have or might in the
future have, against the PMP Releasees by reason of any act, failure to
act, cause, matter or event arising out of, or in any way relating to the
subject matter of and/or the facts and transactions alleged in the Action
or any and all other damages or injury of any nature whatsoever, past,
present and future, in any way related to the Action.
D. WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542. Each Party fully
understands that he, she or it may have additional unknown claims or may have
suffered injuries or damages that are presently unknown to them, which arise out
of or relate to the Action and that unknown complications of presently known
injuries may arise, develop or be discovered in the future. The Parties
acknowledge, however, that this Mutual Release and Settlement Agreement is a
full and final release of all unknown and unanticipated injuries, damages and
claims arising out of or pertaining to the Action as relates to them, and the
matters released in this Agreement, as well as to those now known or disclosed,
and all parties hereto waive all rights or benefits which they now have, or in
the future may have, under the terms of Section 1542 of the California Civil
Code, with regard to the Action and the matters released in this Agreement.
California Civil Code, Section 1542, reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO THE CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
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E. WAIVER OF MISTAKE OF FACT OR LAW. In entering into this Agreement, the
Parties assume the risk of any mistake. If any party should subsequently
discover that any fact relied upon in entering into this Agreement was untrue,
or that their understanding of the facts or of the law was incorrect, that party
shall not be entitled to any relief in connection therewith, including, without
limitation, on the generality of the foregoing, any alleged right or claim to
set aside or rescind this Agreement. This Agreement is intended to be and is
final and binding upon each of the Parties regardless of any mistake of fact or
law or any other circumstance whatsoever.
F. REPRESENTATIONS AND WARRANTIES BY ALL PARTIES HERETO. All Parties
represent and warrant that: (1) They are authorized to compromise and settle all
of the claims which are the subject of this Agreement; (2) They have not sold,
transferred, conveyed, signed, hypothecated, or otherwise disposed of any
claims, rights, demands, actions and causes of action which are the subject of
the Action, or the Agreement; and (3) They agree to indemnify the other
releasing parties and hold them harmless against any future claims brought by
anyone claiming an interest in the Action, including any lien claimant.
G. ENTIRE AGREEMENT. This Agreement contains the sole, complete and entire
understanding of the Parties and may not be altered, modified, or changed in any
manner except by a writing duly executed by said parties. No statements,
promises or representations have been made by any settling party to another, or
relied upon, and no consideration has been, or is, offered, promised, expected
or held out, other than as stated in this Agreement. No party is relying on any
representations other than those expressly set forth herein. There are no oral
or written collateral agreements other than the Note. All prior discussions and
negotiations have been and are, merged and integrated into, and superseded by,
this Agreement.
H. FEES AND COSTS. Each party shall bear its own costs and attorneys' fees
related to the Action and any matters released herein. If any action at law or
in equity, including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to reasonable costs and attorneys' fees in bringing, prosecuting,
and/or defending such action.
I. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective, successors, devisees,
executors, affiliates, representatives, assigns, officers, directors, partners,
agents and employees.
J. CALIFORNIA LAW. This Agreement is executed and delivered within the
State of California, and the rights and obligations of Parties hereunder shall
be governed by, and construed and enforced in accordance with, the laws of the
State of California.
K. JURISDICTION/VENUE. This Agreement and any claim related directly or
indirectly to this Agreement shall be governed and construed in accordance with
the laws of the State of California (without giving regard to the conflicts of
law provisions thereof). No such claim shall be commenced, prosecuted or
continued in any forum other than the federal and state courts of the State of
California located in the County of Los Angeles, and each of the Parties hereby
submits to the jurisdiction of such courts. Each of the Parties hereto hereby
waives any and all rights to argue that this choice of forum provision is or has
become unreasonable in any legal proceeding.
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L. JOINT PRODUCT. This Agreement is the product of bargained for
arms-length negotiations between the Parties, by and through their respective
counsel. This Agreement is the joint product of all of the Parties and their
respective counsel and, therefore, any construction of the intent of the parties
hereto or language hereof to be made by a court of law shall not be construed
individually against any Party hereto.
M. GOOD FAITH. The Parties agree that this Agreement is being entered into
in good faith and without fraud, coercion, duress, or undue influence.
N. NON-ADMISSION OF LIABILITY. The Parties agree that the execution of
this Agreement is a compromise and settlement of disputed claims and/or
potential disputed claims, and that the furnishing of consideration under the
terms of this Agreement shall not be deemed or construed as an admission,
evidence or indication, in any degree, of liability or responsibility by the
parties herein at any time for any purpose. It is further agreed and understood
that this Agreement is being entered into solely for the purpose of avoiding
further expense and inconvenience from further litigation of any and all of the
claims in the Action, or any claims related to such, whether asserted or not,
and may not be referred to in this or any other litigation, whether or not
arising from the same facts and transactions of the Action, except for the
purpose of enforcing the terms of this Agreement.
O. LEGAL CAPACITY. The undersigned represent and warrant that they have
the right, power, legal capacity, and authority to enter into and perform the
obligations under this Agreement on their own behalf and on behalf of anyone or
any entity they represent and that no further approval or consent of any person
or entity is necessary for them to enter into and perform the obligations
contained in this Agreement.
P. NECESSARY ACTS. The undersigned represent and warrant that they shall
do all acts and execute and deliver all documents necessary, convenient or
desirable to effect all provisions of this Agreement.
Q. EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each counterpart being executed by less than all of the
Parties hereto, and shall be equally effective as if a single original had been
signed by all Parties; but all such counterparts shall be deemed to constitute a
single Agreement, and this Agreement shall not be or become effective unless and
until each of the signatory Parties below shall have signed at least one such
counterpart and caused the counterpart so executed to be delivered to counsel
for the adverse Party. Facsimile signatures are as effective as original
signatures for all purposes.
R. TIME IS OF THE ESSENCE. The undersigned understand and agree that time
is of the essence with regard to the provisions of this Agreement.
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S. ACKNOWLEDGMENT. The undersigned certify and hereby represent that each
is duly authorized to execute this Agreement, and that each has had the
opportunity to review or has reviewed and read this Agreement, including the
code section referred to herein, with an attorney of their choice and hereby
warrants that each of the undersigned fully understands the contents, terms and
conditions of this agreement and executes it freely and voluntarily. Further,
Vertical acknowledges that it has consulted with its own independent counsel
regarding the terms and conditions of this Agreement, and the provisions of
California Rule of Professional Responsibility Section 3-300.
DATED: October 19, 2005 XXXXXX XXXXX & XXXXX LLP
By /s/ Xxxxx X. Xxxxx
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XXXXX X. XXXXX, Partner
DATED: October____, 2005 VERTICAL COMPUTER SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxx
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XXXXXXX XXXX, President & CEO
Approved as to form and content:
DATED: October 19, 2005 DATED: October 18, 2005
XXXXXX XXXXX & XXXXX LLP LAW OFFICES OF XXXX XXXXXXX
By: /s/ Xxxxx X. Xxxxx /s/ Xxxx Xxxxxxx
--------------------------------- ----------------------------------
XXXXX X. XXXXX XXXX XXXXXXX, ESQ.
Attorneys for Vertical Computer
Systems, Inc.
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EXHIBIT "A"
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PROMISSORY NOTE
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FOR VALUE RECEIVED, the undersigned, VERTICAL COMPUTER SYSTEMS, INC., a
Delaware corporation (Borrower), promises to pay to XXXXXX XXXXX & XXXXX LLP, a
California limited liability partnership (Lender), the sum of SEVENTY-FIVE
THOUSAND Dollars ($75,000), with interest thereon at the rate of six (6%)
percent per annum, payable as follows:
1. Payment of Principal and Interest. Principal and interest shall be paid
as follows:
a. All principal then outstanding, and all interest, fees, charges,
and other amounts owing hereunder and then unpaid shall be due and payable on
January 31, 2008, (the "Maturity Date"). Vertical shall pay the Note in equal
monthly installments of $ 3,125.00, beginning February 1, 2006, for a period of
24 months. Any unpaid principal balance, and any accrued interest and penalties,
shall immediately come due and payable to Lender at the Maturity Date.
b. Borrower shall pay all amounts owing under this Note in
immediately available funds to Lender at Lender's address as set forth herein,
or at such other place as may be specified in writing by Lender. Each payment,
when made, shall be credited first to interest then due, and then at the option
of Lender to principal, late charges, and other fees and expenses outstanding
hereunder in such order as Lender may determine.
c. Payments received after 1:00 p.m. on any banking day or at any
time on any Saturday, Sunday, or holiday shall be deemed received on the next
banking day.
2. The unpaid principal and accrued interest, and penalties, if any, may
be prepaid in whole or in part at any time without any prepayment penalty.
Borrower agrees to pay all costs and expenses, including all reasonable
attorneys' fees, for the collection of this Note upon default. All payments
shall be made to Lender at 000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxx Xxxxxxx, XX
00000, or at such other place as Lender or any holder hereof may from time to
time designate in writing.
3. In addition, payments not received by Lender by the tenth (10th) day of
the month are subject to a late charge of five (5%) of said payment.
4. This Note shall, at the option of the Lender or any holder hereof, be
immediately due and payable upon failure to make any payment due hereunder or
for breach of any condition of any security interest, mortgage, pledge agreement
or guaranty granted as collateral security for this Note or breach of any
condition of any security agreement or mortgage, if any, having a priority over
any security agreement or mortgage on collateral granted, in whole or in part,
as collateral security for this Note or upon the filing by Borrower of an
assignment for the benefit of creditors, bankruptcy, or for relief under any
provisions of Title 11 of the United States Code; or by suffering an involuntary
petition in bankruptcy or receivership not vacated within thirty days.
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5. In the event this Note shall be in default, and placed with an attorney
for collection, then Borrower agrees to pay all reasonable attorney fees and
costs of collection.
6. If any action at law or in equity, including an action for declaratory
relief, is brought to enforce or interpret the provisions of this Note, the
prevailing party shall be entitled to reasonable costs and attorneys' fees in
bringing, prosecuting, and/or defending such action.
7. This Note shall be binding upon and inure to the benefit of the
Borrower and Lender alike, including their respective successors and assigns.
8. This Note and any claim related directly or indirectly to this Note
shall be governed and construed in accordance with the laws of the State of
California (without giving regard to the conflicts of law provisions thereof).
No such claim shall be commenced, prosecuted or continued in any forum other
than the federal and state courts of the State of California located in the
County of Los Angeles, and Borrower hereby submits to the jurisdiction of such
courts. Borrower hereby waives any and all rights to argue that this choice of
forum provision is or has become unreasonable in any legal proceeding.
9. The Borrower and all other parties to this Note, whether as endorsers
or sureties, waives demand, presentment and protest and all notices thereto and
further agree to remain bound, notwithstanding any extension, modification,
waiver, or other indulgence by any holder or upon the discharge or relea se of
any obligor hereunder or to this Note, or upon the exchange, substitution, or
release of any collateral granted as security for this Note.
10. The Borrower and each endorser of this Note waives presentment, notice
and protest, all suretyship defenses and agrees to all extensions, renewals, or
releases, discharge or exchange of any other party or collateral without notice.
11. This Note shall not be modified, amended, or terminated, except by
written agreement duly executed and delivered by both Lender and Borrower.
DATED: October____, 2005
VERTICAL COMPUTER SERVICES, INC.
By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx, its President and CEO
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