EXHIBIT 10.41
SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS
By this Settlement Agreement and Mutual Release of Claims ("Agreement")
between UTILX CORPORATION ("UTILX") POWER CABLE RESTORATION, INC. ("PCR") and
XXXXXX X. XXXXXXXX ("XXXXXXXX"), the parties agree as follows:
RECITALS
A. UTILX (as assignee/successor to Dow Corning Corp.), PCR and
XXXXXXXX are parties to an agreement dated January 12, 1990, which since that
date has been amended, (hereinafter Amended Dow Contract) which agreement
provided for PCR to perform cable restoration injection work as the exclusive
subcontractor to UTILX in the State of Florida. The parties further entered
into a Subcontractor Agreement dated March 22, 1996,("Subcontract") for
specific work for Florida Power & Light. The Subcontractor Agreement has
terminated on its own. The Amended Dow Contract will expire and terminate on
January 12, 2000.
B. Certain disputes have arisen between the parties hereto arising out
of the work performed pursuant to the Amended Dow Contract as well as
pursuant to the Subcontract, and otherwise. These disputes concern, among
other things, pricing, performance of work, quality of work, assignment of
work, management of work, selection of work, etc.
C. The parties hereto have asserted various claims against each other
and are involved in litigation and arbitration as follows: United States
District Court for the Southern District of Florida - Case No.
98-0272-CIV-XXXXXX, and American Arbitration Association proceeding - Xx. 00
X 000 00000 98.
D. The parties hereto desire, through this Agreement, to completely
and fully compromise, resolve and settle all disputes between them and as
asserted (or that could have been asserted) in the litigation and/or
arbitration forums, and all matters related thereto.
WITNESSETH
That in consideration of the mutual covenants and promises herein
contained, the parties agree as follows:
1. RECITALS. The foregoing recitals are true and correct and are
adopted as a part of this Agreement.
2. TERMINATION OF AMENDED DOW CONTRACT AND MUTUAL RELEASE. The Amended
Dow Contract is hereby immediately terminated. UTILX, PCR and XXXXXXXX,
hereby release each other of and from any and all claims (asserted or which
could have been asserted) liabilities, lawsuits or other causes of actions,
arising out of, in connection with, and/or relating to the Amended Dow
Contract, the Subcontract, the United States District Court proceeding
pending between them in the Southern District of Florida, Case No.
98-0272-CIV-XXXXXX, the American Arbitration Association proceeding, Xx. 00 X
000 00000 98, and from any and all claims or demands whatsoever, in law or in
equity, relating thereto, EXCEPT, this Mutual Release shall not apply to the
rights, duties and obligations of the parties created and/or called for
pursuant to this Agreement.
3. NO ADMISSION OF LIABILITY. It is expressly agreed and understood
that the said consideration and release and discharge of claims are not, and
are not to be construed as, an admission on the part of any party to this
agreement of any liability whatsoever, but said
consideration and releases are in compromise and settlement and in full
satisfaction of any claims between the parties.
4. UTILX PAYMENT TO PCR. UTILX shall pay to PCR the sum of One
Million Dollars ($1,000,000.00) ("Settlement Funds"). This obligation on the
part of UTILX shall be evidenced by this Agreement and also by a separate
Promissory Note to be executed and delivered by UTILX to PCR simultaneously
with the execution of this agreement. The Settlement Funds shall be paid to
PCR by wire transfer as follows (stated due dates):
a. $250,000 (which amount shall include the price for PCR's
equipment as contemplated in paragraph 6) on or before December
31, 1998;
b. $250,000 on or before August 31, 1999;
c. $250,000 on or before May 1, 2000;
d. $250,000 on or before December 29, 2000.
Time is of the essence in connection with the payment of the Settlement
Funds. The parties agree that no interest shall accrue on the Settlement
Funds provided that as to each installment, the wire transfer of that
installment is initiated by UTILX's bank on or before the stated due date,
and each installment is received in full, in cleared funds within ten (10)
days of its stated due date. If, the wire transfer of any installment is not
initiated by UTILX's bank on or before the stated due date, or, if for any
reason, any installment is not received in full and in clear funds, within
ten (10) days of its stated due date, then in that event, the amount of the
Settlement Funds in default shall accrue interest at the rate of 10% per
annum.
For purposes of determining a default in payment, UTILX shall be in
default of its payment obligations if, as to the first installment, PCR does
not receive the first installment in clear funds on or before December 31,
1998. As to each subsequent installment, UTILX shall be in default if PCR
has not received the installment due, in cleared funds, within ten (10) days
after the stated due date.
5. XXXXX BANK ESCROW ACCOUNT. The parties acknowledge that they
have previously established, at Xxxxx Bank, an escrow account bearing account
number 00-000-000. PCR and XXXXXXXX, conditioned upon timely payment of the
installment referred to in paragraph 4a above, hereby release and/or waive
any and all claims to any and all funds held in the escrow account. Said
funds shall be released to UTILX simultaneously upon UTILX making the payment
referred to in paragraph 4a. PCR and XXXXXXXX shall execute any documents
necessary to effect this release.
6. PCR EQUIPMENT. As part of this settlement, UTILX is purchasing
certain equipment from PCR. The equipment contemplated by this paragraph is
the equipment (not including injection caps) which PCR has acquired from
UTILX since January 1, 1998 and which PCR still has on hand. The purchase
price for the equipment is included in the payment referred to in paragraph
4 a. UTILX, shall arrange to pick up the equipment at PCR's place of business
at a mutually convenient time agreed upon by the parties. PCR shall not
however, be required to make the equipment available for pick up unless and
until the payment referred to in paragraph 4 a. is received.
7. INJECTION CAPS. PCR and XXXXXXXX agree to surrender and return
to UTILX or FPL, as may be appropriate, any and all injection caps in PCR's
possession. Injection caps previously provided by UTILX will be returned to
UTILX. Injection caps previously provided by FPL shall be returned to FPL.
The UTILX injection caps shall be returned to UTILX upon receipt by PCR of
the payment referred to in paragraph 4 a. The receipt in full of that
payment shall be a condition precedent to the return of these caps. The FPL
injection caps shall be returned to FPL upon the payment in full by UTILX of
the total Settlement Funds referred to paragraph 4 a-d or when FPL requests,
whichever is sooner. Until the respective caps are returned, the caps shall
not be used and PCR shall store them in a secure location.
8. PENDING INVOICES. All outstanding invoices, xxxxxxxx,
receivables, payables, etc. between the parties hereto are hereby resolved
and subsumed within this Agreement. The only payments to be made between the
parties shall be those as expressly specified in this Agreement.
9. NON-COMPETITION AGREEMENT. PCR and XXXXXXXX (on behalf of
himself and his spouse) do hereby agree not to engage in, carry on,
participate in, assist in or have any involvement whatsoever in any business,
venture, utility, or other activity which in any way competes with UTILX's
(or its successors or assigns) CableCure cable restoration system, business
and work, including but not limited to the introduction of any gas and/or any
liquid to the strands, annulus, or surrounding conduit of any cable for the
purpose of extending its life or improving dielectric performance. PCR's
mere completion of currently on-going air drying jobs shall not be a
violation of this provision. This non-compete agreement shall be effective
for a period of seven years from the date hereof. In addition thereto, PCR
and XXXXXXXX hereby agree to complete confidentiality and nondisclosure with
respect to any and all aspects of UTILX's CableCure and/or cable restoration
system work. PCR and XXXXXXXX agree these provisions are reasonable given
the highly proprietary, confidential nature of the cable restoration system
and the trade secrets involved.
UTILX acknowledges that a material consideration for XXXXXXXX, PCR and
Xxxxxx X. Xxxxx (by separate instrument) agreeing to the terms of this
non-competition provision is the timely receipt in full of the payments
referred to in paragraph 4 a-d. Accordingly, in the event UTILX, for any
reason (including but not limited to the failure of PCR to receive timely
payment in full as a distribution in any bankruptcy proceeding instituted by
or against UTILX) defaults in its payment obligations as discussed in
paragraph 4, and fails to cure the default within the time frame described in
paragraph 10, (or, if PCR is required by final Order of a Court of competent
jurisdiction to
disgorge or refund all or any portion of previously paid Settlement Funds,
and PCR in fact returns any previously paid Settlement Funds in compliance
with such an Order) this non-competition provision shall become immediately
null and void and PCR and XXXXXXXX shall be released from the operation of
the provision as well as any non-competition and confidentiality provisions
which survive the termination of the Amended Dow Contract. Likewise, in that
event, the separate Non-Competition Agreement entered into by Xxxxx shall
become immediately null and void and Xxxxx shall be released from the
operation of that Non-Competition Agreement. PCR and XXXXXXXX acknowledge
that their entry into this Non-Competition Agreement constituted a material
consideration for UTILX agreeing to make the payments referred to in
paragraph 4 a-d. Accordingly, in the event PCR, XXXXXXXX or XXXXX default in
their obligations under their respective Non-Competition Agreements and they
fail to cure the default within the time frame described in paragraph 10,
then UTILX's obligation to pay the unpaid balance of the Settlement Funds
shall be excused
10. REMEDIES FOR BREACH OF PAYMENT OR NON-COMPETE PROVISIONS TO BE
CUMULATIVE, NOTICE AND CURE. Because of the materiality to the parties
respectively of UTILX's obligation to make timely and complete payment and
PCR, XXXXXXXX and XXXXX'X obligation to not compete, the parties have agreed
to significant penalties in the event of a default on those obligations.
Given the severity of the potential consequences of a default however, the
parties feel it is appropriate to have a reciprocal Notice and Cure provision
which must be complied with in the event of a default.
In the event PCR, XXXXXXXX or XXXXX have defaulted under their
respective Non-Competition Agreements, UTILX shall give notice to PCR,
XXXXXXXX and XXXXX as provided herein. PCR, XXXXXXXX and XXXXX, shall have a
period of fifteen (15) days to cure the default (cure period). If PCR,
XXXXXXXX or XXXXX fail to fully and completely cure the default within
the cure period, UTILX shall be excused from paying the balance of the
Settlement Funds and shall be entitled to pursue other remedies including but
not limited to injunctive relief and damages. By agreeing to provide for a
cure period under the foregoing circumstances, UTILX does not agree and it
shall not be construed as an acknowledgement by UTILX that defaults under the
Non-Competition Agreements can be cured.
In the event UTILX defaults in its payment obligations, PCR shall give
notice of the default to UTILX as provided herein. UTILX shall have a period
of fifteen (15) days to cure the default (cure period). If UTILX fails to
cure the default within the cure period, PCR, XXXXXXXX and XXXXX shall be
released from their Non-Competition Agreements as well as any non-competition
and confidentiality provisions which survive the termination of the Amended
Dow Contract and PCR and XXXXXXXX shall be entitled to pursue other remedies
including but not limited to collection of any unpaid Settlement Funds and
other damages, if any.
11. DISMISSAL OF ARBITRATION AND LITIGATION. The parties hereto each
authorize and direct their respective legal counsel of record to promptly
arrange for dismissal with prejudice of the litigation pending in the United
States District Court for the Southern District of Florida and the
arbitration pending before the American Arbitration Association. The parties
agree that each will bear their own attorneys fees, expert fees and costs
incurred in connection with the litigation and arbitration.
12. ENFORCEMENT OF AGREEMENT. Any party which substantially prevails
in an effort to enforce any provision of this Agreement shall be entitled to
an award of attorneys fees and costs incurred therein. The parties submit
to the jurisdiction of the Federal District Court for the Southern District
of Florida for any enforcement proceeding concerning this Agreement or the
Promissory Note called for herein.
13. ASSIGNMENT OF IMPROVEMENTS AND INVENTIONS. The parties acknowledge
that paragraph 14 of the Amended Dow Contract calls for the assignment to
UTILX of any improvements in processes, materials or equipment for cable
restoration devised by PCR or XXXXXXXX during the term of the Amended Dow
Contract. UTILX, PCR and XXXXXXXX are unaware of any such improvements and
processes, materials or equipment for cable restoration as contemplated by
the Amended Dow Contract. To the extent such improvements, processes,
materials or equipment do exist, they are hereby assigned to UTILX.
14. NON-DISPARAGEMENT. From the date of this Agreement forward,
neither party shall say, do or publish anything disparaging concerning and
that could cause material damage to the other party's work, business or
system. The parties acknowledge that it is difficult if not impossible to
control completely everything any employee and/or company representative
might say or do. Accordingly, the parties recognize that it is the intent of
this paragraph to prohibit XXXXXXXX and Xxxxxx Xxxxx from directly; or via a
third-party acting at their instruction, from engaging in the conduct
described above. Further, the parties recognize that it is the intent of
this paragraph to prohibit UTILX senior or management personnel from
directly; or via a third-party (including more junior UTILX personnel) acting
at their instruction, from engaging in the conduct described above.
In the event that UTILX defaults in its obligations under this
non-disparagement provision, PCR, XXXXXXXX and XXXXX shall give notice of the
default to UTILX as provided herein. UTILX shall have a period of fifteen
(15) days to cure the default (cure period). If UTILX fails to fully and
completely cure the default within the cure period, PCR, XXXXXXXX and XXXXX
may bring an action for injunctive relief and/or damages but shall remain
bound by their non-competition agreements (unless they have been released
pursuant to other provisions of this Agreement).
In the event PCR, XXXXXXXX and/or XXXXX default under their respective
non-disparagement agreements, UTILX shall give notice to PCR, XXXXXXXX and/or
XXXXX as provided herein. PCR, XXXXXXXX and XXXXX shall have a period of
fifteen (15) days to cure the default (cure period). If PCR, XXXXXXXX or
XXXXX fail to fully and completely cure the default within the cure period,
then UTILX's payment obligations in connection with any unpaid Settlement
Funds shall be modified as follows:
A. The parties, without prejudice to their positions regarding
the alleged disparagement, shall establish an interest bearing
escrow account (at a mutually agreed upon bank) which shall be
titled in the names of PCR and UTILX (escrow account). If
possible, the parties will use the escrow account previously
established at Xxxxx Bank. The waiver in paragraph 5 shall
not apply to funds escrowed under this paragraph 14.
B. UTILX shall pay any remaining installments of the Settlement
Funds into this escrow account. Except for making the
payments into the escrow account rather than to PCR, UTILX
shall otherwise be required to comply with the obligations of
paragraph 4 regarding timely payment. The terms of paragraph
4 regarding accrual of interest and default in payment
(including the notice and cure provisions regarding default in
payment) shall apply with equal force to payments into the
escrow account as they apply to payments to PCR. So long as
UTILX complies with those terms in connection with payments
into the escrow account, UTILX shall not be considered in
default of its payment obligations and the Non-Competition
Agreements shall remain in force (unless they have been
released pursuant to other provisions of this Agreement).
C. Under the circumstances contemplated by this paragraph, UTILX
shall be entitled to institute an action for injunctive relief
and damages against the party(ies) in violation of the
Non-Disparagement Agreement(s). In the event a final
determination is made that PCR, XXXXXXXX and/or XXXXX did in
fact violate their non-disparagement agreements, then UTILX
shall be entitled to be paid from the escrow account (and to
set off against any unpaid installments of Settlement Funds)
liquidated damages in the amount of $50,000.00 plus any actual
damages, including attorneys fees and costs, which UTILX may
be awarded as a result of the disparagement. If a final
determination is made that PCR, XXXXXXXX and XXXXX did not
violate their non-disparagement agreements, then all of the
escrowed funds together with accrued interest (and any unpaid
installments of the Settlement Funds as they become due) shall
be paid to PCR. In addition, PCR, XXXXXXXX and/or XXXXX, as
may be appropriate, shall be entitled to recover any attorneys
fees and costs awarded to them from UTILX.
D. In the event UTILX'S damages exceed the balance of the
escrowed funds together with the remaining unpaid installments
of the Settlement Funds, then in that event, UTILX shall be
entitled to seek recovery of those excess damages from the
party(ies) in breach of the non-disparagement agreement(s).
By agreeing to provide for a cure period under the foregoing
circumstances, UTILX does not agree and it shall not be construed as an
acknowledgement by UTILX that defaults under the Non-Disparagement Agreements
can be cured.
15. AGREEMENT SUPERSEDES MEMORANDUM OF UNDERSTANDING. The parties
acknowledge and agree that this Agreement is the document referred to in
paragraph 12 of the Memorandum of Understanding executed on behalf of the
parties by their respective counsel on December 17, 1998. This Agreement is
intended to formalize and finalize the settlement agreed to in principle as
reflected in the Memorandum of Understanding. This Agreement supersedes the
Memorandum of Understanding and shall be the controlling document between the
parties as to the settlement.
16. HEADINGS. Subject headings to the paragraphs of this Agreement are
included for purposes of convenience only and should not affect the
construction or interpretation of any of those provisions.
17. CONSTRUCTION OF AGREEMENT. No provision or term of this Agreement
shall be construed against any party by reason of that party having drafted
such term or provision.
18. COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one in the same Agreement.
19. BINDING AFFECT. This Agreement shall be binding on and shall
enure to the benefit of the parties to it and their respective heirs, legal
representatives and successors.
20. AUTHORITY. PCR and UTILX hereby represent and warrant to each
other that the officer/representative signing on behalf of PCR and UTILX
respectively has been duly authorized by their respective Board of Directors
and, if necessary under the respective Articles and By-Laws, have been
authorized pursuant to a Corporate Resolution, to execute on behalf of PCR
and UTILX respectively and deliver this Agreement to the other party. PCR,
XXXXXXXX and UTILX acknowledge that they are mutually relying upon the
representation and warranty in entering into this Agreement.
21. NOTICE. Any notice to be given under this Agreement by any party
to the other party shall be in writing and may be effected by personal
delivery, registered or certified mail, return receipt requested, or
facsimile (but in the case of facsimile, a hard copy shall also be provided
by registered or certified mail, return receipt requested). Notice shall be
effective upon receipt.
Notice shall be made to UTILX at:
(for hand delivery)
Utilx Corporation
00000 Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
(for certified or registered mail)
Utilx Corporation
X.X. Xxx 00000
Xxxx, Xxxxxxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to Xxxxxxx Xxxxxx, Esq at:
OLES, MORRISON, XXXXXX, LLP
0000 Xxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice to PCR and XXXXXXXX shall be made to:
Xxxxxx X. Xxxxxxxx
0000 X. X. 00xx Xxxxxx
Xxxxx, XX 00000
Facsimile: 000-000-0000
With a copy to Xxxxx X. Xxxxx, Esq. at:
XXXXXX & XXXXXXXXX, P.A.
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice to XXXXX shall be made to:
Xxxxxx X. Xxxxx
00000 X.X. 00xx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
000-000-0000
With a copy to Xxxxx X. Xxxxx, Esq. at:
XXXXXX & XXXXXXXXX, P.A.
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any party may change his/its address for purposes of this paragraph by
giving notice of the change in accordance with the provision of this
paragraph. Absent such change, notice provided to the addresses set forth
above shall be effective.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the date appearing beneath each party's name.
POWER CABLE RESTORATION, INC.
By: /s/Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX, PRES.
Date: 12/30/98
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/s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX
Date: 12/30/98
---------------------------------
UTILX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
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As: Chief Executive Officer
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Date: 1/12/99
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