1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Settlement Agreement") is dated as of
this 30th day of September, 1998, and is by and between DataCard Corporation, a
Delaware corporation with its principal place of business at 00000 Xxxx Xxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxxx 00000 ("DataCard"), and Xxxxxxx International, Ltd.,
a Delaware corporation with its principal place of business at Xxx Xxxxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000 ("Xxxxxxx").
WHEREAS, DataCard provides third-party maintenance services to certain
purchasers of Xxxxxxx equipment pursuant to the terms of that certain third
Party Product Service Agreement dated October 13, 1992 (the "Service
Agreement"); and
WHEREAS, Xxxxxxx is contractually obligated to make monthly payments to
DataCard in consideration of DataCard providing such services to Xxxxxxx'x
customers (the "Trade Payables"); and
WHEREAS, Xxxxxxx is contractually obligated to make quarterly payments
on that certain promissory note dated September 15, 1992 (the "Note Payable");
and
WHEREAS, Xxxxxxx has been and remains in default under the Service
Agreement and Note Payable as a result to its failure to pay to DataCard when
due certain Trade Payables and certain balances under the Note Payable; and
WHEREAS, as a result of Xxxxxxx'x defaults, DataCard filed suit against
Xxxxxxx in Hennepin County District Court, State of Minnesota, on August 14,
1998, to collect the amounts then owing from Xxxxxxx to DataCard (the "DataCard
Collection Action"); and
WHEREAS, subsequent to the filing of the DataCard Collection Action,
Xxxxxxx has made a series of One Hundred Thousand Dollar ($100,000) weekly
payments (the "Weekly Payments") and the parties have negotiated a resolution to
their disputes, which resolution is more fully described below; and
WHEREAS, the cumulative Trade and Note Payable balance due and owing
from Xxxxxxx to DataCard on October 1, 1998 (excluding amounts billed in
September, 1998 but not yet due), including interest through September 30, 1998,
is One Million Four Hundred Twenty-One Thousand Seven and 30/100 Dollars
($1,421,007.30) (the "October 1 Balance") (the calculation made to arrive at the
October 1 Balance is shown on Attachment A hereto).
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, DataCard and Xxxxxxx hereby agree as
follows:
1. OCTOBER 1 PAYMENT BY XXXXXXX. Xxxxxxx shall pay to DataCard before the close
of business on October 1, 1998, by wire transfer to the same account to which
Xxxxxxx
2
has been wiring the Weekly Payments, the October 1 Balance. Following such
payment, the Note Payable shall be deemed paid in full and all Trade Payables
which have an invoice due date on or before October 1, 1998 shall be deemed paid
in full.
2. RECONCILIATION OF XXXXXXXX FOR TIME PERIOD APRIL 1, 1998 TO PRESENT. During
the month of October, 1998, the parties hereto shall review all invoices
submitted by DataCard to Xxxxxxx with invoice dates from April 1, 1998 to the
present, and the parties shall make any adjustments (by way of credit or
invoice, as applicable) necessary to correct any billing errors contained on
those invoices. For purposes of the reconciliation, both parties accept and
agree to the interest charges and rates which were agreed to by Xxxxx Xxxxxxx of
Xxxxxxx and Xxxxxx Xxxxxxxxxx of DataCard and which were more fully described in
the Amendment and Attachment F-1 to the Service Agreement which was signed by
Xxxxxx Xxxxxxxxxx of DataCard on May 20, 1998 and submitted to Xxxxx Xxxxxxx of
Xxxxxxx. The DataCard Representative (as defined in Subparagraph 5a below) and
the Xxxxxxx Representative (as defined in Subparagraph 5a below) shall
coordinate the reconciliation and, between themselves, agree on any and all
adjustments which may be necessary.
3. CONTINUING SERVICE BY DATACARD. In consideration of Xxxxxxx paying the
October 1 Balance, and continuing to pay on a current basis all now billed but
not yet due Trade Payables and all Trade Payables billed on or after the date
hereof, DataCard covenants to continue to provide service to those Xxxxxxx
customers which it is currently servicing, at current rates and pursuant to the
terms of the Service Agreement, which Service Agreement remains in full force
and effect subject only to any modifications contained in this Settlement
Agreement.
4. PAYMENT TERMS.
a. CONTINUING PAYMENTS BY XXXXXXX. Xxxxxxx shall make all
payments on the Trade Payables described in Paragraph 3 above
on or before the invoice due date. In the event that Xxxxxxx
fails to pay any amount when due, interest on the unpaid
balance shall accrue at the rate of twelve percent (12%) per
annum until the entire balance has been paid, and DataCard
shall, following written notice of nonpayment to Xxxxxxx and a
ten (10) business day cure period, have the right to
immediately discontinue service and to immediately terminate
the Service Agreement. Following termination of the Service
Agreement, neither Xxxxxxx nor DataCard shall have any further
obligation or liability one to the other (including
obligations or liabilities which arise under this Settlement
Agreement), except for the obligation of Xxxxxxx to pay
DataCard in full, with interest, for all services rendered
prior to the termination date and for which DataCard was not
paid prior to the date of termination.
b. SECTION 4.1 OF SERVICE AGREEMENT. Section 4.1 of the
Service Agreement shall be superseded in its entirety by the
following:
2
3
"The Contracted Maintenance Charge for each subcontract
hereunder shall be payable net thirty (30) days from the date
of invoice therefor. All other charges arising hereunder
including taxes shall be invoiced upon occurrence and are
payable in full within thirty (30) days after date of invoice.
DataCard shall submit, by delivery service which issues
receipts, monthly standard invoices for Basic Monthly
Maintenance Charges to Customer for receipt not later than the
fifth (5th) business day following the invoice date. DataCard
shall submit, by regular mail, all other invoices (for
example, invoices for after-hours maintenance) to Customer for
receipt not later than the fifth (5th) business day following
the invoice date. Should Customer challenge the validity of
any charge on the invoice, DataCard shall be notified by
Customer, via facsimile, within ten (10) days of receipt of
the invoice for such charge, of the challenge. Any requested
documentation for the charge shall be provided, via facsimile,
to Customer, within ten (10) days of receipt of the challenge.
DataCard shall further use best efforts (including the use of
overnight delivery services, if necessary) to ensure that
Customer receives charges for services not later than sixty
(60) days after the date on which the service was performed.
5. ACCOUNT TRANSITION. In consideration of and contingent upon payment by
Xxxxxxx of the October 1 Balance and in consideration of and contingent upon
Xxxxxxx'x paying on or before the due date all additional amounts which become
due and owing, DataCard hereby agrees to transition to Xxxxxxx service
responsibility for all Xxxxxxx accounts currently being services by DataCard.
a. TRANSITION OF ALLSTATE, CNA AND SAFECO ACCOUNTS. Between
April 1, 1998 and May 1, 1999 (the specific dates to be
determined by Xxxxxx Xxxxxxxxxx or his successor [the
"DataCard Representative"] and Xxx Lamborghini or his
successor [the "Xxxxxxx Representative"]), Xxxxxxx shall
assume responsibility for servicing the Allstate, CNA and
Safeco accounts. Prior to Xxxxxxx assuming such
responsibility, the DataCard Representative and the Xxxxxxx
Representative shall implement a plan pursuant to which
Xxxxxxx may make offers of employment to those DataCard
customer service engineers who devote the majority of their
time to the servicing of Xxxxxxx equipment at the Allstate,
CNA and Safeco accounts. Additionally, at the mutual agreement
of the DataCard Representative and the Xxxxxxx Representative,
Xxxxxxx may also be permitted to make offers of employment to
certain other DataCard customer service engineers who devote a
significant amount of their time (but not the majority of
their time) to the servicing of Xxxxxxx equipment at the
Allstate, CNA and Safeco accounts. For clarification purposes,
the terms of any offer of employment to be made by Xxxxxxx
pursuant to this Subparagraph 5a shall be determined by
Xxxxxxx without the need to secure approval of the DataCard
Representative; the timing of the offers of employment,
however,
3
4
shall be mutually agreed upon between the Xxxxxxx
Representative and the DataCard Representative.
b. TRANSITION OF ALL OTHER ACCOUNTS. Between May 1, 1999 and
March 31, 2000 (the specific dates to be determined by the
DataCard Representative and the Xxxxxxx Representative),
Xxxxxxx shall assume responsibility for servicing all other
accounts then serviced by DataCard. Prior to Xxxxxxx assuming
such responsibility, the DataCard Representative and the
Xxxxxxx Representative shall implement a plan pursuant to
which Xxxxxxx may make offers of employment to those DataCard
customer service engineers who devote the majority of their
time to the servicing of Xxxxxxx equipment at the accounts
being transitioned. Additionally, at the mutual agreement of
the DataCard Representative and the Xxxxxxx Representative,
Xxxxxxx may also be permitted to make offers of employment to
certain other DataCard customer service engineers who devote a
significant amount of their time (but not the majority of
their time) to the servicing of Xxxxxxx equipment at the
accounts being transitioned. For clarification purposes, the
terms of any offer of employment to be made by Xxxxxxx
pursuant to this Subparagraph 5b shall be determined by
Xxxxxxx without the need to secure approval of the DataCard
Representative; the timing of the offers of employment,
however, shall be mutually agreed upon between the Xxxxxxx
Representative and the DataCard Representative.
c. NO REPRESENTATIONS OR WARRANTIES. Although DataCard, via
the DataCard Representative, will assist Xxxxxxx in making
offers of employment to those DataCard customer service
engineers described above, DataCard makes no representations
or warranties that the persons who receive job offers will
accept the offers.
6. RELEASES.
a. RELEASE BY DATACARD. Effective upon payment by Xxxxxxx of
the October 1 Balance, DataCard, its affiliates and their
respective present and former directors, officers, employees,
successors, agents and assigns, forever release and discharge
Xxxxxxx and its affiliates, and their respective present and
former directors, officers, employees, successors, agents and
assigns (the "Xxxxxxx Released Persons"), for and from any and
all liabilities, actions, suits, claims, demands, damages,
injuries and causes of action of whatever kind and nature
(including claims for attorneys' fees and expenses), whether
known or unknown, whether contingent, liquidated or otherwise,
that they or any of them have against any or all of the
Xxxxxxx Released Persons arising out of the subject matter of
the Service Agreement; provided, however, that nothing in this
Subparagraph 6a shall release any of the Xxxxxxx Related
Persons from any agreements, covenants or obligations which
any of them may continue to have after the date hereof under
this Settlement Agreement or the Service Agreement.
4
5
b. RELEASE BY XXXXXXX. Effective upon payment by Xxxxxxx of
the October 1 Balance, Xxxxxxx, its affiliates and their
respective present and former directors, officers, employees,
successors, agents and assigns, forever release and discharge
DataCard and its affiliates, and their respective present and
former directors, officers, employees, successors, agents and
assigns (the "DataCard Released Persons"), for and from any
and all liabilities, actions, suits, claims, demands, damages,
injuries and causes of action of whatever kind and nature
(including claims for attorneys' fees and expenses), whether
known or unknown, whether contingent, liquidated or otherwise,
that they or any of them have against any or all of the
DataCard Released Persons arising out of the subject matter of
the Service Agreement; provided, however, that nothing in this
Subparagraph 6b shall release any of the DataCard Related
Persons from any agreements, covenants or obligations which
any of them may continue to have after the date hereof under
this Settlement Agreement or the Service Agreement.
7. DISMISSAL OF DATACARD ACTION. Immediately following receipt by DataCard of
the October 1 Balance, the parties shall file a stipulation with the Hennepin
County District Court to dismiss the DataCard Collection Action with prejudice,
including all claims and counterclaims which were or could have been asserted
therein. The filing of such stipulation shall not bar DataCard from filing
subsequent collection or other actions in the event of a breach by Xxxxxxx of
the terms of this Settlement Agreement or the terms of the Service Agreement.
8. MISCELLANEOUS PROVISIONS.
a. BINDING NATURE AND ASSIGNMENT. This Settlement Agreement
shall be binding upon the parties and their respective
affiliates, present and former directors, officers, employees,
successors, agents, assigns and all other persons directly or
indirectly involved in the performance of the Service
Agreement. Neither party shall have the power to assign or
delegate its rights or duties under this Settlement Agreement
to any third party without the prior written consent of the
other party.
b. CHOICE OF LAW; VENUE; ATTORNEYS' FEES AND COSTS. The
construction, enforceability, validity and interpretation of
this Settlement Agreement shall be governed by the laws of the
state of Minnesota, without giving effect to its provisions
relating to conflict of laws. Any action between the parties
based on or arising out of this Settlement Agreement or the
Service Agreement shall be venued in state district court for
the district of Hennepin County, Minnesota, or federal
district court for the district of Minnesota. In the event of
any such action, the prevailing party shall be awarded
attorneys' fees and legal costs.
c. ENTIRE AGREEMENT AND MODIFICATIONS. This Settlement
Agreement constitutes the entire and exclusive statement of
the agreement between the parties with respect to its subject
matter and there are no oral or written
5
6
representations, understandings or agreements relating to this
Settlement Agreement which are not fully expressed herein.
Notwithstanding, expect as expressly modified by this Settlement
Agreement, the Service Agreement remains unmodified and in full force
and effect. No waiver, modification, change or amendment hereof shall
be valid unless such is in writing and signed by an authorized
representative of the party against which such waiver, modification,
change or amendment is sought to be enforced.
d. FACSIMILE SIGNATURES. This Settlement Agreement shall be signed by
authorized representatives of both parties, it being expressly agreed
that facsimile signatures shall be acceptable for purposes of binding
the parties to the terms hereof. In the event that the parties elect to
use facsimile signatures, they shall as soon thereafter as practicable
exchange fully executed originals of this Settlement Agreement.
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
as of the date first above-written.
DATACARD CORPORATION XXXXXXX INTERNATIONAL, LTD.
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
Its VP General Counsel & Secretary Its CEO
Date: 9/30/98 Date: 9/30/98
6
