EXHIBIT 10.45
SETTLEMENT AGREEMENT
This Settlement Agreement is entered into by and among Xxxxxxx X. Xxxxx,
Xxxx Xxxxxxxx, and Xxxxxxxx Inc. (collectively "Claimants") and SmartServ Online
Inc. ("SmartServ").
RECITALS
A. A dispute has arisen between Claimants and SmartServ that includes, but
is not limited to, the claims, demands, causes of action, and defenses set forth
in the civil action in the Superior Court of California, Case Number GIC 806132
("Litigation"), and the JAMS arbitration, Arbitration Number 420012718
("Arbitration").
B. Claimants and SmartServ desire that the dispute and Litigation between
them be settled and released in their entirety, in accordance with this
Settlement Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. DISMISSAL OF LITIGATION AND ARBITRATION. Upon execution of this
Agreement, Claimants shall effect the withdrawal and/or dismissal of the
Litigation and Arbitration, without prejudice to recommencing them should
SmartServ fail to make the payment required in Section 2. In the event that
SmartServ fails to make such payment and Claimants exercise their rights to
recommence the Litigation and Arbitration, (i) Claimants and other Holders (as
defined below) shall return the shares of SmartServ common stock delivered
pursuant to Section 3 below, and (ii), SmartServ shall pay all filing fees
associated with the recommencement of the Litigation and/or Arbitration, and
agrees that, in response to the recommenced Litigation and/or Arbitration, it
will not assert any defense based upon (a) the statute of limitations, laches or
the passage of time from the date of withdrawal and/or dismissal to the
recommencement of the Litigation and/or Arbitration, or (b) res judicata or
collateral estoppel arising out of Claimant's withdrawal and/or dismissal of the
Litigation and Arbitration. In the event that the litigation or Arbitration is
recommenced, the parties will stipulate that there is no need to resubmit any
previously submitted pleadings and that discovery has been completed.
2. DELIVERY OF REPORTS AND PAYMENT THEREFOR. Claimants shall deliver to
SmartServ a bundling retailed applications report and a MVNO market report,
electronic versions of which reports have been tendered and accepted by
SmartServ. In consideration, therefore, SmartServ shall pay Claimants the sum of
Forty Five Thousand Dollars ($45,000) on or before February 29, 2004. Payment
shall be made by tendering a cashier's check made payable to Navigato & Xxxxxx
LLP by overnight mail to 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx
00000.
3. PAYMENT AND DELIVERY OF STOCK. Upon the execution of this Agreement,
SmartServ agrees to provide Claimants with Sixty Thousand (60,000) shares of
common stock of SmartServ (the "Settlement Shares"). SmartServ shall distribute
the Settlement Shares as follows: 29,760 shares to Xxxxxxx X. Xxxxx; 7,440
shares to Xxxx Xxxxxxxx; 10,800 shares to Xxxxxxx Xxxxxxxx; 6;000 shares to
Xxxxxx Xxxxxxxx; and 6,000 shares to Xxxxxxx Xxxxxx (each recipient to be
referred to as a "Holder"). Prior to receiving any Settlement Shares, each
Holder will execute an Accredited Investor Form, attached hereto as Exhibit A.
3.1 Registration Rights. SmartServ shall include the Settlement Shares in
the registration statement that it files on From SB-2 with the SEC following the
completion of its currently contemplated equity private placement, which is
expected to be completed by February 29, 2004 (the "Offering"). This
registration statement will also include the shares purchased by the investors
in the Offering, and is expected to be filed by April 30, 2004. The actual
completion date of the Offering, as well as the actual filing date of the
registration statement, may differ from the expected dates referenced herein.
3.2 Piggy-back Registration Rights. In addition to the rights contained in
Section 3.1, the Holders shall have the following piggy-back registration
rights: if at any time following the execution of this Settlement Agreement,
SmartServ shall determine to prepare and file with the
SEC a registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with the stock option or other employee
benefit plans, then the SmartServ shall send to each Holder a written notice of
such determination and, if within five business after the date of such notice,
any such Holder shall so request in writing, SmartServ shall include in such
registration statement all or any part of the Settlement Shares belonging to
such Holder, to the extent such Settlement Shares are not then already eligible
for resale pursuant to Rule 144 under the Securities Act. Holders will not be
responsible for paying SmartServ's fees and expenses related to SmartServ's
compliance with this Section 3.
3.3 Penalties. If SmartServ fails to either file the registration statement
referenced in Section 3.1, or have it declared effective by the SEC, in each
case within the time periods set forth in the registration rights agreement to
be executed by SmartServ and each investor in the Offering (a final copy of
which will be provided to Holders), SmartServ shall pay to Holders an aggregate
registration penalty of $2,000 per month (the "Registration Penalties") by
tendering a cashiers check to Navigato & Xxxxxx LLP on the first of every month
that the violation continues. In the event that Holders include the Settlement
Shares in a registration statement pursuant to Section 3.2, Holders shall be
paid the Registration Penalties in the event that SmartServ is required to pay
any registration penalties to any other selling shareholder in such registration
statement.
4. GENERAL RELEASE OF CLAIMS. In consideration of the promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and upon payment as provided in
Xxxxxxxxx 0, Xxxxxxxxx and SmartServ hereby irrevocably waive and release each
other, their assignors, agents, attorneys, and all other persons from all known
and unknown claims, demands, or causes of action which any
party may have against any other party. SmartServ and Claimants do not waive or
release any claims arising out of a breach of this Agreement or any of its
terms, covenants, representations, or warranties.
5. NO ADMISSION OF LIABILITY. This Agreement is the result of a settlement
and compromise of disputed matters as set forth herein. Nothing contained herein
nor the consummation of this Agreement is to be construed or deemed an admission
of liability, culpability, negligence, or wrongdoing on the part of the parties.
No party hereto admits that the claims of the other are valid or more
meritorious and each party hereto agrees that the terms of this Agreement shall
never be used, referred to, or considered as an admission of liability of such
claims. The parties have entered into this Agreement with the intention of
avoiding protracted disputes, uncertainties, and litigation with their attendant
inconveniences and expenses.
6. MISCELLANEOUS
6.1 This Agreement constitutes and contains the entire agreement between
the parties hereto and fully supersedes and replaces any and all prior
negotiations, proposed agreements or understandings and agreements, written or
oral, between the parties pertaining to the subject matter hereof. This
Agreement may be amended only by an agreement in writing signed by the party to
be bound.
6.2 This Agreement may be executed in counterparts and when so executed,
may be considered one and the same instrument. A facsimile signature will have
the same force and effect as an original.
6.3 If any provision of this Agreement is found to be unenforceable, the
remaining provisions will remain in full force and effect.
6.4 The parties agree to bear their own costs, fees, and expenses,
including attorney's fees.
6.5 Any dispute arising out of or relating to this Agreement shall he
submitted to binding arbitration. The parties agree that any arbitration shall
be conducted by
JAMS pursuant to JAMS streamlined procedures. Venue for any arbitration shall be
San Diego, California and shall be governed by the laws of the State of
Delaware, excluding any laws that direct the application of another
jurisdiction's laws.
6.6 In the event there is a dispute between the parties arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
its reasonable attorney's fees and costs.
6.7 SmartServ and Claimants will act in good faith, make all reasonable
efforts, and execute any documents necessary to carry out their duties under
this Agreement.
XXXX X. XXXXX
Dated: 2/27/04 /s/ Xxxx X. Xxxxx
--------------------- -----------------------------------
XXXX XXXXXXXX
Dated: 2/27/04 /s/ Xxxx Xxxxxxxx
--------------------- -----------------------------------
XXXXXXXX, INC.
Dated: 2/27/04 /s/ Xxxx X. Xxxxx
--------------------- -----------------------------------
By: Xxxx X. Xxxxx
President
SMARTSERV ONLINE, INC.
Dated: 2/27/04 /s/ Xxxxxx Xxxx
--------------------- -----------------------------------
By: Xxxxxx Xxxx
Chief Executive Officer
EXHIBIT A
SOPHISTICATED INVESTOR FORM
This Exhibit A is made part of the Settlement Agreement (the
"Agreement") by and among Xxxxxxx Xxxxx, Xxxx Xxxxxxxx and Xxxxxxxx, Inc., (the
"Claimants") and SmartServ Online, Inc., a Delaware corporation with an address
at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, XX 00000 ("SmartServ" or the
"Company"). All terms not otherwise defined herein shall have the meaning set
forth in the Agreement.
The undersigned, each a Holder as defined in the Agreement, hereby
represents and warrants as follows:
(a) The undersigned is acquiring the shares of Common Stock of
SmartServ in settlement of claims or of legal fees due from Claimants, as the
case may be, and for investment purposes only, for its own account, and not for
the benefit of others, nor with any view to, or in connection with any
distribution or public offering thereof within the meaning of the Securities
Act.
(b) The undersigned understands that the shares of Common Stock of
SmartServ being issued to it pursuant to the Agreement has not been registered
under the Securities Act or any state securities law by reason of its issuance
in a transaction which is exempt from the registration requirements of the
Securities Act and such laws, and that such shares must be held indefinitely
unless they are subsequently registered under the Securities Act and such laws
or a subsequent disposition thereof is exempt from registration under the
applicable provisions of the Securities Act and such laws. The undersigned
acknowledges the certificates evidencing such shares will contain a legend to
the foregoing effect.
(c) The undersigned has sufficient knowledge and expertise in business
and financial matters so as to enable it to analyze and evaluate the merits and
risks of acquiring the Common Stock of SmartServ pursuant to the terms of the
Agreement and is able to bear the economic risk of such acquisition, including a
complete loss of its investment in the Common Stock of SmartServ. The
undersigned has reviewed, or is aware of how to obtain, the Company's press
releases and SEC filings, including without limitation, the Forms 8-K filed by
the Company on January 30, 2004 with the Securities and Exchange Commission,
which contain, among other things, information on management and board of
director changes, as well as updated risk factors.
(d) The transactions provided for in the Agreement with respect to the
shares of Common Stock of SmartServ being acquired by the undersigned are not
part of any preexisting plan or arrangement for, and there is no agreement or
other understanding with respect to, the distribution by the undersigned of any
of such shares.
Dated: ______________, 2004 By:_____________________________________
________________________________________
[Name and Title]
