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EXHIBIT 6.20
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this "Agreement") is made as of
October 28, 1999 by and between Tornado Development, Inc. ("Tornado") and
XXXXX.XXX, INC. ("Qorus") (each, individually, a "Party" and collectively, the
"Parties") with reference to the following facts:
A. On April 15, 1999, Tornado and Qorus entered into a Software
License Agreement (the "License Agreement"), in which Tornado as licensor
granted Qorus a license to use Tornado's proprietary Software (as defined
therein) upon the terms and conditions set forth therein.
B. The Parties disagree about the nature and extent of Qorus'
performance of its obligations to date as a licensee under the License
Agreement.
C. Tornado and Qorus now desire to settle forever certain issues
and potential claims related to or arising out of the License Agreement and
transactions between Qorus and Tornado.
NOW, THEREFORE in consideration of the promises and covenants
hereinafter set forth, the Parties hereto agree as follows:
1. Releases. In consideration of the mutual agreements,
covenants and releases contained herein, and with the exception of the rights
and obligations created or preserved by this Agreement:
(a) Tornado hereby agrees that Qorus shall be
deemed to have paid, and shall have no liability to Tornado whatsoever as a
result of any failure to pay, the Initial License Fee (as defined in the License
Agreement) and invoices outstanding s of October 28, 1999 in the aggregate
amount of $432,222 (the "Past Due Fee Obligation"). Accordingly, Tornado hereby
forever relieves, releases and discharges Qorus of and from any and all claims,
debts, liens, liabilities, demands, obligations, promises, acts, agreements,
costs and expenses (including, but not limited to, attorneys' fees), damages,
actions and causes of action, of whatever kind or nature, now existing, based
on, arising out of, or in connection with the failure of Qorus to pay the Past
Due Fee Obligation as provided in the License Agreement.
(b) Qorus, on behalf of its, agents,
contractors, attorneys, employees, heirs, predecessors, successors and all other
persons, firms or corporations related to or in any way affiliated with,
claiming by or through, otherwise acting on behalf or under their direction or
control of the foregoing (all of which collectively shall be included
hereinafter in the defined term "Qorus"), hereby agrees that Tornado and its
officers, directors, shareholders, subsidiaries, parents, affiliates,
distributors, licensees, agents, employees, partners, successors, assigns,
attorneys, and all persons and entities operating on their behalf or under their
direction or control (all of which shall collectively hereinafter be
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included in the defined term "Tornado") shall have no liability to Qorus
whatsoever as a result of any act, omission, condition or occurrence existing at
any time from the beginning of the world through the date of this Agreement,
concerning those matters referred to, arising out of or connected in any way
with or relating in any manner whatsoever, directly or indirectly, to the
License Agreement or any transaction or agreement by and between Qorus and
Tornado (the "Section 1(b) Released Matters"). Accordingly, Qorus hereby forever
relieves, releases and discharges Tornado of and from any and all claims, debts,
liens, liabilities, demands, obligations, promises, acts, agreements, costs and
expenses (including, but not limited to, attorneys' fees), damages, actions and
causes of action, of whatever kind or nature, whether known or unknown,
suspected or unsuspected, now existing or arising in the future, based on,
arising out of, or in connection with the Section 1(b) Released Matters.
2. Additional Essential Consideration for Mutual
Release: In connection with, and as conditions to, the mutual releases stated by
the parties herein, the Parties agree as follows:
(a) Qorus will, simultaneously with execution of this Agreement, return to
Tornado for cancellation, Series B Preferred Stock Certificate No. 1 for
127,324 shares;
(b) Qorus will, simultaneously with execution of this Agreement, return to
Tornado for cancellation Tornado Development, Inc. Class A Common Stock
Purchase Warrant, Certificate No. W-1, issued April 15, 1999 (the "Original
Warrant") to purchase 50,000 shares;
(c) Tornado will within 10 days from the date hereof issue to Qorus, (i)a Class
A Common Stock Purchase Warrant (the "Replacement Warrant") exercisable for
25,000 shares of Class A Common Stock, dated as of the date of issuance of
the Replacement Warrant but otherwise in form identical to the form of the
Original Warrant (ii) a credit of $67,778 to be applied by Tornado to
payments for additional services or other fees payable by Qorus to Tornado,
and (iii) Series B Preferred Stock Certificate No. 2 for 64,843 shares of
Series B Preferred Stock;
(d) Qorus shall cause Xxxxxxx Xxxxxx to resign as a member of the Tornado Board
of Directors, effective as of the date of this Agreement pursuant to a
resignation in form substantially similar to the form of resignation
attached as Attachment 2(d); and Qorus hereby forever waives and
relinquishes any and all rights to designate a director to the board of
directors of Tornado whether existing or arising under that certain CoSale
Agreement dated July 9, by and among Xxxxx Xxxx, Hurricane, LLC, Tornado
and holders of Series C Preferred Stock (the "CoSale Agreement"), the
Stockholders Rights Agreement dated July 9, 1999,by and between Tornado and
the persons and entities listed on Exhibit A thereto (the "Stockholders
Rights Agreement"), the Corporation's Articles of Incorporation as
currently in effect, or otherwise and agrees that this Agreement shall be
waiver in accordance with the provisions of the foregoing agreements listed
in this Section 2(d), and shall be effective regardless of the
accomplishments of the amendments contemplated by clauses (g) and (h)
below.
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(e) Qorus will execute and deliver to Tornado all shareholder consents and such
other consents, certificates and documents as are deemed necessary by
Tornado and its counsel to file with the Secretary of State of California
an Amended and Restated Certificate of Determination for the Series B
Preferred Stock, deleting Section 6.2 of the certificate of determination
which had required that Qorus appoint one member to the Tornado Board of
Directors; and
(f) Qorus hereby consents and agrees to, and will execute and deliver to
Tornado, an amendment to the License Agreement (the "Amended License
Agreement") in the form attached hereto as Attachment 2(f) whereby all
references in the License Agreement to favored nations status or pricing
will be deleted.
(g) Qorus hereby consents and agrees to, and agrees to execute and deliver to
Tornado, an amendment to the CoSale Agreement (the "Amended CoSale
Agreement") in the form attached hereto as Attachment 2(g) substantially in
the form consistent with the intent of this Agreement whereby all
references to any right of Qorus to nominate or elect any director of
Tornado shall be eliminated.
(h) Qorus hereby consents and agrees to, and agrees to execute and deliver to
Tornado, an amendment to the Stockholders Rights Agreement (the "Amended
Stockholders Rights Agreement") in the form attached hereto as Attachment
3(h) substantially in the form consistent with the intent of this Agreement
whereby all references to any right of Qorus to nominate or elect any
director of Tornado shall be eliminated.
3. Agreements Survive. All obligations of the parties
not specifically released pursuant to Section 1 above survive the execution of
this Agreement.
4. Civil Code Section 1542 Waiver. Qorus intend and
agree that this Agreement shall be effective as a full and final accord and
satisfaction and general release of and from all Section 1(b) Released Matters.
In furtherance thereof, the Qorus acknowledges that it is familiar with Section
1542 of the Civil Code of the State of California, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
Except as otherwise specifically set forth in this Agreement, Qorus waive any
and all rights it has or may have under California Civil Code Section 1542,
and/or any similar provision of law or successor statute to it, with respect to
the Section 1(b) Released Matters. In connection with this waiver, Qorus
acknowledges that it is aware that they it may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which they now know or believe to be true, with respect to the subject
matter of this Agreement. Nevertheless, Qorus intends by this Agreement, and
with and upon the advice of its own independently selected counsel, to release
fully, finally and forever all Section 2(b)Released Matters under this
Agreement. In furtherance of such intention, the releases
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set forth in this Agreement shall be and shall remain in effect as full and
complete releases notwithstanding the discovery or existence of any such
additional or different claims or facts relevant hereto.
6. No Assignment. The Parties warrant and represent that
each is the sole and lawful owner of all right, title and interest in and to
every potential claim and other matter constituting the matters released by that
party under Section 2 of this Agreement, and that they have not assigned or
transferred or purported to assign or transfer to any person or entity, any
right, title or interest in or to the matters released by that party under
Section 2 of this Agreement. Each Party shall indemnify, defend and hold all
other Parties harmless from and against any and all claims which may now or
hereafter be made against such other Parties by virtue of any breach of the
provisions of this paragraph.
7. Independent Legal Advice. Each Party acknowledges,
warrants and represents that it has sought such independent legal advice as he
or it deems necessary with respect to the advisability of making this Agreement
and the meaning and effect of all aspects of the Agreement, and executes this
Agreement with full knowledge of all rights which he or it may have. Each Party
represents that it enters into this Agreement freely, knowingly and voluntarily,
and that the execution and delivery of the Agreement is not the result of any
fraud, duress, mistake or undue influence whatsoever.
8. Construction of Agreement. Each Party acknowledges
that it has had an opportunity to review and revise this Agreement, and the
normal rule of construction to the effect that ambiguities in an agreement are
to be resolved against the drafting party shall not apply to the interpretation
of this Agreement.
9. Continued Effect. This Agreement shall inure to the
benefit of and shall be binding upon the successors, assigns, representatives,
heirs and beneficiaries of the Parties, and each of them.
10. Further Assurances and Survival of Obligations. The
releases, representations and warranties made by the Parties herein shall
continue in full force and effect notwithstanding the performance of other
obligations hereunder. Qorus will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to Tornado from time to time such vouchers,
assignments, conveyances, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the covenants and obligations or Qorus hereunder as Tornado
may reasonably require.
11. Choice of Law, Jurisdiction and Venue. This Agreement
shall be construed in accordance with, and be governed by, the laws of the State
of California. Each of the Parties agrees and irrevocably submits to the
jurisdiction and venue of the courts of the State of California, County of Los
Angeles in the event of any action or proceeding filed to enforce or interpret
the terms of this Agreement or to recover damages for breach thereof.
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12. Costs and Attorneys' Fees. The Parties hereto agree
to pay their own costs and attorneys' fees incurred in connection with the
drafting, negotiation and execution of this Agreement and all matters prior
thereto. However, in any action or proceeding filed to enforce or interpret the
terms of this Agreement or to recover damages for breach thereof, the prevailing
Party shall be entitled to recover reasonable attorneys' fees and other costs of
suit in addition to any other relief that may be granted.
13. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which, when taken together, shall constitute one and the same Agreement.
14. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall become
prohibited or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
15. Warranty of Authority. Each of the persons executing
this Agreement on behalf of a Party hereto warrants and represents that he or
she is duly authorized to execute this Agreement on behalf of such Party.
16. Complete Agreement. This Agreement embodies the
entire understanding of the Parties, and there are no other agreements,
understandings or representations in effect between the Parties relating to the
subject matter of this Agreement. This Agreement may be amended or modified only
by a written agreement executed by all of the Parties.
17. Headings. The various headings in the Agreement are
inserted for convenience only and shall not be deemed to be a part of or in any
manner affect this Agreement or any provision hereof.
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IN WITNESS WHEREOF, the parties have approved and executed this
Agreement as of the date hereinabove set forth.
Dated: October 28, 1999 Tornado Development, Inc.
By:
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Printed name:
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Its:
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Dated: October 28, 1999 XXXXX.XXX, INC.
By:
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Printed name:
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Its:
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APPROVED AS TO FORM AND CONTENT:
Dated: October 28, 1999 TROOP XXXXXXX XXXXXX XXXXXXX & XXXXX
By:
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Xxxxxx Xxxxxxxx, Esq.
Attorneys for Tornado Development, Inc.
Dated: October 28, 1999
By:
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Printed name:
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Its:
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