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EXHIBIT 10.27
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is effective as of
March 1, 1997.
1. PARTIES.
The parties to this Agreement are Xxxxx Xxxxxxxx, as Trustee for the
Xxxxxxxx Family Trust dated February 1, 1995; Xxxxx Xxxxxx; Xxxx Xxxxx; Xxxx
Xxxxxx; Xxxxxxxx Xxxxxxxx; Xxxxxx Xxxx; Xxxxxxx X. Xxxxxxx; Xxxxx Xxxxx, as
Trustee for the Xxxxx and Xxxxxx Xxxxx Family Trust dated December 4, 1992;
Xxxxxxx and Xxxxxx Xxxxxxx as Trustees for the Xxxxxxx Family Trust dated
December 22, 1992; Xxxxxx X. Xxxxxxxxxxx as Trustee for the Kreisheimer Family
Trust dated December 11, 1992; Xxxxx and Xxxxxxx Xxxx as Trustees for the Hall
Family Trust dated July 29, 1987; Xxxxx and Xxxxx Xxxxxx as Trustees for the
Xxxxxx Family Trust dated January 16, 1991; Xxxx Xxxxx and Xxxxxxx Xxxxx,
husband and wife; Xxxxxx X. Xxxxxx; Xxxxxx X. Xxxxx (collectively "plaintiffs")
and Dataflex Corporation ("Dataflex").
2. RECITALS.
A. Plaintiffs and Dataflex are parties to the lawsuit now pending in
Maricopa County, Arizona, styled Xxxxx Xxxxxxxx; Xxxxx Xxxxxx; Xxxx Xxxxx; Xxxx
Xxxxxx; Xxxxxxxx Xxxxxxxx; Xxxxxx Xxxx; Xxxxxxx X. Xxxxxxx; Xxxxx Xxxxx;
Xxxxxxx and Xxxxxx Xxxxxxx as Trustees for the Xxxxxxx Family Trust dated
December 22, 1992; Xxxxxx X. Xxxxxxxxxxx; Xxxxx and Xxxxxxx Xxxx as Trustees
for the Hall Family Trust dated July 29, 1987; Xxxxx and Xxxxx Xxxxxxx as
Trustees for the Xxxxxxx Family Trust dated July 29, 1987; Xxxx Xxxxx and
Xxxxxxx Xxxxx, husband and wife; Xxxxxx X. Xxxxxx; Xxxxxx X. Xxxxx v. Dataflex
Corporation, Case No. CV 96 14329 (the "Lawsuit"). The Lawsuit asserts causes
of action based upon breach of contract in connection with the filing of a
shelf registration;
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B. Plaintiffs are former shareholders of a corporation formerly known as
Sunland Computer Services, Inc. ("Sunland").
C. Dataflex acquired all of Sunland's stock, including the stock owned
by plaintiffs, pursuant to the terms of a Stock Purchase Agreement dated August
19, 1994;
D. In connection with Dataflex' acquisition of Sunland, Dataflex issued
Dataflex stock to plaintiffs in exchange for plaintiffs' Sunland stock;
E. The plaintiffs and Dataflex entered into a registration agreement
which provided, in part, that a shelf registration would be filed at a later
date;
F. Plaintiffs contend that the shelf registration was not filed in a
timely fashion;
G. Dataflex claims that the filing was delayed by conditions which were
beyond the control of Dataflex, and that the shelf registration has now been
filed and is fully effective.
H. Without making any admissions of any kind, Dataflex and plaintiffs
agree that it is in their mutual best interests to resolve the Lawsuit.
3. PURPOSE OF AGREEMENT.
The parties to this Agreement, by way of good faith compromise and
settlement of their respective positions, and in consideration of the mutual
convenants contained herein, agree to resolve all claims, counterclaims and
causes of action, whether raised or not raised, or which could have been
raised, in the Lawsuit, which arise out of, are connected with, or relate to,
directly or indirectly, the acquisition of Sunland, the insurance of Dataflex
stock and the filing of the shelf registration.
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NOW THEREFORE, in consideration of the above recitals and the mutual
covenants and agreements hereinafter expressed, the parties agree as follows:
4. TERMS AND AGREEMENT.
A. Dataflex shall pay to plaintiffs as follows:
i. $225,000 on March 7, 1997;
ii. $75,000 on April 1, 1997.
B. The payments set forth in Paragraph A above shall be made via
cashier's checks payable to "Xxxxxxxxx Xxxxx Trust Account" and shall be
delivered on the dates stated to plaintiffs' counsel, Xxxxxxx X. Xxxxxx,
Xxxxxxxxx Xxxxx, Two Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000.
C. Dataflex will convey to plaintiffs 270,000 shares of Dataflex
common stock on March 14, 1997. These shares shall be issued in the name of
"Xxxxxxxxx Xxxxx Trust Account" and shall be delivered on the date stated to
plaintiffs' counsel, Xxxxxxx X. Xxxxxx, at the address set forth in Paragraph B
above. Dataflex further agrees that within five (5) business days after
receiving written request from plaintiffs' counsel, Xxxxxxx X. Xxxxxx, Dataflex
will instruct the transfer agent to cancel the certificate issued to Xxxxxxxxx
Xxxxx Trust Account and to reissue the shares reflected thereby in the names
and quantities, cumulatively not to exceed 270,000 directed by plaintiffs'
counsel.
D. Dataflex will file a registration statement relating to the
shares conveyed in Paragraph C (the "Registration Statement"), on the
appropriate form, with the Securities and Exchange Commission on or before
April 15, 1997. After the Registration Statement is filed, Dataflex will use
its reasonable best efforts to cause it to become effective as soon as
possible. When such registration becomes effective, Dataflex shall provide
plaintiffs'
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counsel with written notice that the Registration Statement has become effective
within two (2) business days at the address set forth in Paragraph B above.
E. In the event that the Registration Statement is not filed
on or before April 15, 1997, Dataflex will pay $2,000 to plaintiffs collectively
for each full business day following April 15, 1997 that passes until the
Registration Statement is filed. Dataflex will make each payment due plaintiffs
under this provision by delivering to the U.S. mail a $2,000 cashier's check to
plaintiff's counsel, mailed to the address set forth in Paragraph B above within
two (2) business days of each day on which Dataflex incurs a $2,000 debt to
plaintiffs under this provision.
F. Dataflex forgives the indebtedness owed to Dataflex by
Xxxxx Xxxxxxxx in the amount of $80,000.00, by Xxxx Xxxxx in the amount of
$5,000.00, by Xxxx Xxxxxx in the amount of $17,197.50, and shall, within ten
(10) business days of the date of this Agreement, return to each of them the
original promissory note evidencing such indebtness marked "Paid in Full."
G. Concurrent with the execution of this Agreement, the
parties shall execute a stipulation to dismiss the Lawsuit with prejudice, and
plaintiffs' counsel shall thereafter promptly cause the Stipulation to be filed
with the Court within ten (10) business days following the execution of this
Agreement.
5. GENERAL MUTUAL RELEASE
A. Excepting for the rights, duties and liabilities set forth
in this Agreement, plaintiffs, for themselves and for each of their assigns,
successors, heirs, beneficiaries, agents, representatives, administrators and
executors (collectively "Plaintiffs' Releases"), hereby forever release the
"Dataflex Releases," defined as: Dataflex Corporation
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and each of its divisions, subsidiaries, affiliates, officers, directors,
shareholders, owners, insurers, representatives, financial advisors,
underwriters, accountants, agents, attorneys, servants, current and former
employees, assigns, predecessors and successors, and all persons acting by,
through, or in concert with them, and the Dataflex Releases hereby forever
release Plaintiffs' Releases, and each of them, from any and all claims,
demands, actions, causes of action, controversies, complaints, suits, debts,
liens, contracts, agreements, promises, liabilities, responsibilities, charges,
losses, damages, attorneys' fees, costs and expenses of every kind whatsoever,
in law, equity, or otherwise, whether known or unknown, suspected or
unsuspected, fixed or contingent (hereafter, "Claims"), which the parties now
own or hold, or have at any time heretofore owned or held against the other
party in connection with, arising from or related to, directly or indirectly,
the facts and matters alleged in the Lawsuit; or which could have been raised
in the Lawsuit, or which arise out of, are connected with, or relate to, either
directly or indirectly, the acquisition of Sunland, the issuance of Dataflex
stock, and the filing of the shelf registration; provided, however, that
nothing in this Agreement shall be construed as a release of any claims
Plaintiffs, or any of them, may have against the Dataflex Releases, or any of
them, arising out of or relating to health care benefits.
B. Plaintiffs agree that this Release will apply to all
unknown and unanticipated injuries, as well as those presently known or
disclosed. Plaintiffs acknowledge that they may discover facts that are
different from, or in addition to, those which they now know or believe to be
true, but agree that this Release is now and shall remain effective,
notwithstanding the existence or discovery of additional or different facts.
C. Plaintiffs have been advised by their legal counsel of,
understand, and acknowledge the significance and consequence of this Release.
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D. Plaintiffs represent and warrant that there has been no
assignment or other transfer of any interests in the claims released hereunder
and plaintiffs agree to indemnify and hold forever harmless the Dataflex
Releases, and each of them, from any claims, liabilities, demands, costs and
expenses, including reasonable attorneys' fees, incurred as a result of any
person or entity asserting such claims against the Dataflex Releases, or any of
them, pursuant to assignment or transfer. Plaintiffs agree that if they
hereafter commence, join or in any manner seek relief arising out of, based upon
or relating to any of the claims released hereunder, or in any manner assert
against the Dataflex Releases, or any of them, any of the claims released
hereunder, then plaintiffs, jointly and severally, shall indemnify and forever
hold harmless the Dataflex Releases, and each of them, from any and all claims,
liabilities, demands, costs and expenses, including reasonable attorneys' fees,
incurred as a result thereof.
6. GENERAL PROVISIONS.
A. Each party hereto represents and warrants that he or it has
succeeded to full power to make the releases and agreements contained herein,
and that he or it has not assigned, encumbered or in any manner transferred all
or any portion of the claims covered by the releases and agreements contained
herein.
B. Each party hereto acknowledges that he or it has been
represented by counsel in the negotiation of this Agreement, and that this
Agreement is the result of an arms-length negotiation. Because the parties
hereto have received the terms of this Agreement, and have relied on the advice
of their respective attorneys as to the terms and provisions, each of them have
had the opportunity to add to or delete from the initial drafts of this
Agreement, the parties agree that the usual rule that the provisions of a
document are to be construed against the drafter does not apply to the
interpretation of the provisions of this Agreement.
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C. The parties agree that the terms of this Agreement are to
be treated as confidential, and neither party will disclose the contents hereof
to any third party, except that each party may disclose this Agreement to their
auditors, insurers or professional accountants (or any other person who might
need to review this Agreement in their discharge of their ordinary professional
responsibilities). If either party is served with compulsory process to obtain
copies of this Agreement, the party so served shall promptly notify the other
party to afford that party the opportunity to object to such production.
D. This Agreement constitutes a single, integrated, written
contract expressing the entire agreement of the parties hereto. No other
statements, representations or promises, written or oral, express or implied,
have been made by any party to any other. All prior discussions and
negotiations have been and are merged and integrated into, and are superseded
by, this Agreement. This Agreement may be modified only by a writing signed by
the party or parties to be charged.
E. The headings in this Agreement are for convenience only,
and are not a party of this Agreement, and shall not in any way affect the
interpretation of this Agreement.
F. This Agreement may be executed in counterparts, each part
of which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
G. The parties hereto shall cooperate to effectuate, and shall
undertake such actions as are reasonable necessary to effectuate, this
Agreement.
H. In the event that any provisions of this Agreement, or the
application thereof, become or is declared by a court of competent jurisdiction
to be illegal, void
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or unenforceable, the remainder of this Agreement shall continue in full force
and effect. The parties further agree to replace such void, illegal or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the fullest extent possible, the economic, business and
other purposes of such void or unenforceable provision. Notwithstanding the
foregoing, however, Dataflex shall have no further obligation to plaintiffs and
the finality of this Agreement shall not be affected by any determination of any
appropriate government agency, or by any court or administrative body, as to the
treatment of the monies paid to the plaintiffs.
I. If any party to this Agreement brings an action to enforce
its rights hereunder, the prevailing party shall be entitled to recover its
costs and expenses, including reasonable attorneys' fees, if any, incurred in
connection with such suit.
J. Any action brought to interpret or enforce this Agreement,
shall be brought before a state or federal court of competent jurisdiction
located within the United States District of Arizona and the parties hereto
irrevocably consent to the jurisdiction of such court and service of process for
such purpose. The terms of this Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the state of Arizona.
K. Each party shall bear his or its own costs and attorneys'
fees in the Lawsuit.
IN WITNESS WHEREFORE, the parties hereto have executed this Agreement
either personally or by and through their respective authorized agent(s).
DATED March 1, 1997
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/s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxxxx as Trustee of the Xxxxx Xxxxxx
Xxxxxxxx Family Trust dated 2/1/95
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/s/ Xxxx Xxxxx /s/ Xxxx Xxxxxx
----------------------------------- -----------------------------------
Xxxx Xxxxx Xxxx Xxxxxx
/s/ Xxxxxxxx Xxxxxxxx /s/ Xxxxxx Xxxx
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Xxxxxxxx Xxxxxxxx Xxxxxx Xxxx
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxx Xxxxx
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Xxxxxxx X. Xxxxxxx Xxxxx Xxxxx as Trustee of the Xxxxx
Family Trust dated 12/4/92
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxxxx
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Xxxxxxx X. Sickmn as Trustee Xxxxxx Xxxxxxx as Trustee
for the Xxxxxxx Family Trust for the Xxxxxxx Family Trust
dated 12/22/92 dated 12/22/92
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxx
----------------------------------- -----------------------------------
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxx
/s/ Xxxxx Xxxx /s/ Xxxxxxx Xxxx
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Xxxxx Xxxx as Trustee for the Xxxxxxx Xxxx as Trustee for the
Hall Family Trust dated 7/29/87 Hall Family Trust dated 7/29/87
/s/ Xxxxx Xxxxxx /s/ Xxxx Xxxxxx
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Xxxxx Xxxxxx as Trustee for the Xxxx Xxxxxx as Trustee for the
Xxxxxx Family Trust dated 1/16/91 Xxxxxx Family Trust dated 1/16/91
/s/ Xxxx Xxxxx /s/ Xxxxxxx Xxxxx
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Xxxx Xxxxx Xxxxxxx Xxxxx
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/s/ Xxxxxx X. Xxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxx as Trustee for
the Kreisheimer Family Trust dated
12/11/92
DATAFLEX CORPORATION
By /s/
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Its PRESIDENT
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READ AND APPROVED BY:
X'XXXXXX, CAVANAGH, ANDERSON,
XXXXXXXXXXXXX & XXXXXXXX, P.A.
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Attorneys for Defendent
XXXXXXXXX XXXXX
By /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Attorneys for Plaintiffs
