Exhibit 10.1
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SETTLEMENT AGREEMENT
(with Release and Indemnification)
THIS SETTLEMENT
AGREEMENT (hereinafter "Agreement") is entered into this
8th day of February, 2005 by and
between:
48 Horsehill,
LLC, a New Jersey Limited Liability Company, Scotto Holding
Company, LLC and Villa Enterprises
Management, LLC all having offices at 17 Elm
Street, Morristown, New Jersey 07960
and
AFP Imaging
Corporation and AFP Technologies Corporation, having offices at
50 Clearbrook Road, Elmsford, New York
10523, (hereinafter collectively referred
to as "the Parties")
WHEREAS, 48
Horsehill, LLC initiated the ACTION (as defined herein) against
AFP Imaging Corporation (pled as Kenro
Corporation), AFP Technologies
Corporation and others alleging certain
ENVIRONMENTAL CONTAMINATION CLAIMS (as
defined herein) involving, arising from or
related to the PROPERTY (as defined
herein); and
WHEREAS, at the
time of trial, 48 Horsehill, LLC and Defendants AFP Imaging
Corporation (pled as Kenro Corporation) and
AFP Technologies Corporation)
reached a settlement of the ACTION; and
WHEREAS the
scope and intent of the overall settlement was placed on the
record in the ACTION before the Honorable
David S. Cramp, J.S.C., on December 6,
2004 ("RECORD"); and
WHEREAS the
Parties desire to enter into the within Agreement in accordance
with the terms and conditions set forth
herein.
NOW, THEREFORE,
in consideration of the mutual covenants contained herein,
the sufficiency of which the Parties hereby
acknowledge, and by which the
Parties intend to be legally bound, the
Parties agree as follows:
1. DEFINITIONS.
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The following definitions, which defined terms are set forth herein
in
all capital letters, shall apply only to
the Agreement, and shall not apply to
any other agreement, nor shall they be used
in evidence, except with respect to
the Agreement:
A. "48 HORSEHILL" shall mean 48 Horsehill, LLC, plaintiff in
the
ACTION, Scotto Holding Company, LLC and
Villa Enterprises Management, Ltd.,
Inc., and their respective successors and
assigns.
<PAGE>
B. "AFP" shall mean AFP Imaging Corporation and AFP
Technologies
Corporation, some of the defendants in the
ACTION, former Kenro Corporation, and
Xenon Industries, Inc., a New York
Corporation, together with their respective
past and present parents, subsidiaries,
predecessors, officers, directors,
shareholders, successors and assigns.
C. "PROPERTY" shall mean the real property and all
appurtenances,
improvements and personal property thereon,
natural or man-made, including but
not limited to air, soils, groundwater,
surface water, plant life, animal life,
whether in the past, present, or future,
which is the subject of the ACTION and
which is commonly known as 46-48 Horsehill
Road, Cedar Knolls (Hanover
Township), New Jersey and which is
designated on the Tax Map of Hanover Township
as Block 701, Lot 11.
D. "OFF-SITE PROPERTY" shall mean the real property and all
appurtenances, improvements and personal
property thereon, whether natural or
man-made, including but not limited to air,
soils, groundwater, surface water,
plant life, animal life, whether in the
past, present, or future, to which
ENVIRONMENTAL CONTAMINATION from the
PROPERTY has, may have or will migrate or
emanate.
E. "ACTION" shall mean the litigation 48 Horsehill, LLC commenced
by
complaint filed on or about December 26,
2001 in the Superior Court of New
Jersey, Law Division, Morris County bearing
Docket No.: MRS-L-43-02 against AFP
Imaging Corporation (pled as Kenro
Corporation) and AFP Technologies Corporation
and others, alleging certain ENVIRONMENTAL
CONTAMINATION CLAIMS involving,
arising from, or relating to the
PROPERTY.
F. "CLAIM" shall mean the assertion of any right including, but
not
limited to, all past, present or future
claims, causes of action, complaints,
cross-claims, counterclaims, affirmative
defenses, writs, demands, letters,
inquiries, requests, suits, lawsuits,
rights, duties, remedies, actions, damages
(including, without limitation,
consequential, punitive and/or exemplary damages
and/or natural resource damages),
penalties, claims for costs and attorney fees,
and expert fees, interest and any other
expenses or compensation, of any kind or
nature, liens, contracts, indemnity or
defense obligations, contribution claims,
agreements, promises, liabilities,
judgments, settlements, losses, costs,
expenses, administrative proceedings,
directives, governmental actions, direct
actions or other causes of action or
orders, whether known or unknown, asserted
or unasserted, foreseen or unforeseen,
fixed or contingent, direct or indirect,
matured or unmatured, whether in law,
equity or otherwise, which 48 HORSEHILL or
any other PERSON now has, ever had, or may
have in the future, whether 48
HORSEHILL or any other PERSON is aware of
any of the foregoing. However, the
term "CLAIM" shall exclude any action
against AFP under the Frivolous Complaint
Act brought by any Party in the ACTION and
is subject to the exception detailed
in Paragraph 6.
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<PAGE>
G. "ENVIRONMENTAL CONTAMINATION" means the actual, alleged,
potential
or threatened contamination or exposure of,
or damage or injury to, air,
environment, atmosphere, soil, sediments,
property (tangible or intangible),
water (including, without limitation,
groundwater, surface water and any other
form or body of water), natural resources,
plant life, or animal life, within,
on, over, under, about or through the
PROPERTY or OFF-SITE PROPERTY, by,
involving, arising from or relating to the
presence, existence, movement,
migration, emanation, emission, discharge,
seepage, release, disposal, dumping,
landfilling or escape of irritants,
contaminations, pollutants, toxins vapors,
soot, smoke, fumes, acids, alkalis,
chemicals, noise, energy, radiation,
volatile organic compounds, chlorinated
solvents (including, without limitation
trichloroethylene, cis-1,2,
dichlorethylene, vinyl chloride, and
trichloroethane), polychlorinated
biphenyls, benzene, oil, petroleum, petroleum
products or derivatives, asbestos, silica,
liquids or gases, waste materials of
any type, or any other substance, irritant,
contaminant or pollutant, or any
form of toxic, hazardous or injurious
substance or material including, without
limitation: (1) "hazardous wastes" as
defined by the Resource Conservation and
Recovery Act of 1976, as amended; (2)
"hazardous substances" and "pollutant(s)
or contaminant(s)" as defined by the
Comprehensive Environmental Response,
Compensation and Liability Act, as amended,
42 U.S.C. ss.9601, et seq.: (3)
"toxic substances" as defined by the Toxic
Substances Control Act, as amended;
(4) "hazardous materials" as defined by the
Hazardous Materials Transportation
Act, as amended; (5) substances defined or
deemed hazardous under New Jersey
statutes and regulations including, without
limitation, the New Jersey Spill
Compensation and Control Act, N.J.S.A.
58:10-23.11 et seq. and the New Jersey
Environmental Rights Act, N.J.S.A. 2A:35A-1
et seq.; together with amendments
thereto, regulations promulgated thereunder
and all successor legislation and
regulations thereof, as well as words of
similar purport or meaning referred to
in any other federal, state, county or
municipal statute, ordinance, rule or
regulation; and (6) any other substance or
material alleged by any PERSON now or
in the future to be (whether before or
after its or their presence, existence,
movement, migration, emanation, emission,
discharge, seepage, release, disposal,
dumping, landfilling or escape)
detrimental, harmful, injurious, hazardous,
noxious, nuisance-causing or toxic, whether
within, on, over, under, about or
through the PROPERTY or OFF-SITE
PROPERTY.
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<PAGE>
H. "ENVIRONMENTAL CONTAMINATION CLAIMS" means any CLAIM made,
asserted
or filed, or which may be made, asserted or
filed in the future (whether now
known or unknown), by any PERSON that
involves, arises out of or relates in any
way to ENVIRONMENTAL CONTAMINATION CLAIMS
including, without limitation, CLAIMS
alleging property damage, natural resource
damage, costs with respect to cleanup
studies, analysis, investigations, ongoing
maintenance responsibilities,
response and/or remediation involving,
arising out of or relating to
ENVIRONMENTAL CONTAMINATION, whether at law
or in equity, and whether sounding
in tort, contract, equity, nuisance,
trespass, negligence, diminution in value,
strict liability or any other statutory or
common law cause of action of any
kind whatsoever involving, arising out of
or relating to ENVIRONMENTAL
CONTAMINATION, the sole, limited, and
exclusive exception to which is any
personal injury claims.
I. "PERSON" means any natural person, class or group of natural
persons, corporation, partnership,
association, trust or any other entity or
organization, including, without
limitation, any federal, provincial, statute,
county, city or municipal governmental or
quasi-governmental body, and/or any
political subdivision, department, agency
or instrumentality thereof.
2.
BACKGROUND.
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The above WHEREAS clauses are incorporated by reference as if
set
forth at length herein.
3. PURPOSE AND
SCOPE.
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The purpose of the Agreement is to resolve all past, present
and
potential disputes by 48 HORSEHILL against
AFP as well as all past, present and
potential disputes by any PERSON against
AFP in connection with any and all
ENVIRONMENTAL CONTAMINATION CLAIMS that
involve, arise from or relate to the
PROPERTY, the OFF-SITE PROPERTY, and/or the
ACTION. Upon AFP's payment of the
Settlement Amount to 48 Horsehill, LLC, 48
HORSEHILL agrees and shall fully,
totally and forever release AFP from and
against any and all ENVIRONMENTAL
CONTAMINATION CLAIMS that 48 HORSEHILL had,
has or may have against AFP that
involve, arise from or relate to the
PROPERTY, OFF-SITE PROPERTY and/or the
ACTION; and that, upon AFP's payment of the
Settlement Amount to 48 Horsehill,
LLC, 48 HORSEHILL shall defend, indemnify,
hold and save harmless AFP from and
against any and all ENVIRONMENTAL
CONTAMINATION CLAIMS against AFP that involve,
arise from or relate to the PROPERTY,
OFF-SITE PROPERTY, or the ACTION by any
PERSON. 48 HORSEHILL agrees that it is the
express intent of this Agreement that
AFP is saying "good-bye forever" to the
PROPERTY, OFF-SITE PROPERTY and the
ACTION; and 48 HORSEHILL expressly assumes
any and all past, present or future
liability of AFP concerning ENVIRONMENTAL
CONTAMINATION CLAIMS against AFP by
any PERSON that involve, arise from or
relate to the PROPERTY, OFF-SITE PROPERTY
and/or the ACTION, the sole, limited and
exclusive exception to which being any
personal injury.
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<PAGE>
4. SETTLEMENT
AMOUNT.
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In consideration of the obligations assumed by 48 HORSEHILL and
covenants made by 48 HORSEHILL herein, AFP
shall pay to 48 Horsehill, LLC the
sum of Six Hundred and Fifty Thousand
Dollars ($650,000) (hereinafter the
"Settlement Amount") by certified funds or
wire transfer.
5. INVESTIGATION
AND REMEDIATION.
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48 HORSEHILL shall undertake diligent action to conduct further
investigation and remediation with respect
to ENVIRONMENTAL CONTAMINATION that
involves, arises from or relates to the
PROPERTY under the supervision and
direction of the New Jersey Department of
Environmental Protection ("NJDEP") and
obtain a No Further Action letter or
comparable clearance from NJDEP.
6. PERSONAL
INJURY EXCEPTION.
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The sole, limited and exclusive exception to the full assumption by
48
HORSEHILL of any and all past, present and
future liabilities of AFP concerning
ENVIRONMENTAL CONTAMINATION CLAIMS
involving, arising from, or relating to the
PROPERTY, 0FF-SITE PROPERTY and/or the
ACTION is any personal injury claim
against AFP. AFP has agreed to this
exception for personal injury claims based
on the express representation and warranty
made by Anthony Scotto, the managing
member of Scotto Holdings, LLC, which is
the managing member of 48 HORSEHILL,
LLC and Stuart Lieberman, Esq., attorney
for 48 Horsehill, LLC on the RECORD
that neither is aware of any pending or
threatened personal injury claims.
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<PAGE>
7. TIME BY WHICH
PAYMENT IS TO BE MADE.
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AFP
shall pay 48 Horsehill, LLC the Settlement Amount, sent directly
to
48 Horsehill, LLC, 17 Elm Street,
Morristown, New Jersey 07960, via certified
funds or wire transfer no later than sixty
(60) days from December 6, 2004 or no
later than thirty (30) days after the
execution of the Agreement by and between
the Parties, whichever is later.
8. RELEASE AND
INDEMNIFICATION BY 48 HORSEHILL.
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As a material part of the consideration for the Agreement,
contemporaneously with the payment of the
Settlement Amount, 48 HORSEHILL shall
execute, acknowledge and deliver to AFP,
care of AFP's attorneys, Farer Fersko,
P.A., 600 South Avenue, P.O. Box 580,
Westfield, New Jersey 07091-0580 the
