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Exhibit 10.50
SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS
This Settlement Agreement and Mutual Release of Claims
("Agreement"),
dated as of November 3, 2008 (the "Effective Date") is entered
into between
C.D.S. Engineering, LLC, a limited liability company organized
under the laws of
the State of California with a principal place of business at
40725 Encyclopedia
Circle, Fremont, CA 94538 ("CDS"), on behalf of itself, its
representatives,
heirs, executors, administrators, trustees, predecessors
(including, without
limitation, CDS Group Corporation, a Delaware corporation),
successors,
affiliates (including, without limitation, C.D.S. Engineering,
Inc., a
California corporation), subrogors, subrogees, lessees, lessors,
grantees,
assignees, assignors, subsidiaries, agents, employees, servants,
owners, alter
egos, attorneys, general partners, limited partners, and
representatives on the
one hand, and Intraop Medical Corporation, a corporation
organized under the
laws of the State of Delaware with a principal place of business
at 570 Del Rey
Avenue, Sunnyvale, California, 94085 ("Intraop"), acting on
behalf of itself,
its representatives, heirs, executors, administrators, trustees,
predecessors,
successors, affiliates, subrogors, subrogees, lessees, lessors,
grantees,
assignees, assignors, subsidiaries, parent corporations, agents,
employees,
servants, officers, directors, members, shareholders, owners,
alter egos,
attorneys, general partners, and limited partners, on the other
hand. CDS and
Intraop are sometimes referred to hereinafter individually as a
"Party," and
collectively, the "Parties".
WHEREAS:
A. Intraop and CDS are parties to a Manufacturing Services
Agreement dated
September 5, 2002, amended on January 6, 2005, further amended
on March 16,
2005, and further amended on April 28, 2005 (as amended, the
"MSA"), under which
CDS agreed to manufacture for and sell to Intraop certain
Products (as such term
is defined in the MSA) and accessories under and relating to
Intraop's
proprietary Mobetron trademark, patents and associated
intellectual property
rights, for which Intraop has granted CDS a limited
manufacturing license.
B. Although relating to the MSA, but to the extent they may be
considered
separate from the MSA, Intraop and CDS are also parties to other
agreements
relating to manufacturing schedules and sales prices for certain
of Intraop's
Products, accessories and services, including without limitation
a Memorandum of
Understanding dated January 5, 2005, as amended and restated on
March 16, 2005
(as to any and all such other agreements excluding this
Agreement, whether
written or oral, the "Other Agreements").
C. In a letter to CDS dated September 11, 2008, Intraop stated
claims
against CDS based on a breach of one or more terms of the MSA
and other rights
under law and equity (together with any other reserved claims,
the "Intraop
Claims") including, without limitation: i) incomplete Products
and overpayments
amounting to $638,511.00 as of the date of such letter, ii)
misrepresentations
of CDS relating to the foregoing, iii) incorrect charges and
invoicing by CDS,
and iv) undelivered Products for which Intraop has already
submitted payment to
CDS (the "Intraop Property"). CDS disputes these claims.
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<PAGE>
D. CDS claims that it holds accounts receivable in the amount
of
$468,104.34 due and owing from Intraop under the MSA (together
with any other
reserved claims, the "CDS Claims") which Intraop has disputed
and continues to
dispute.
E. The Parties wish to fully and finally resolve their
respective claims
and to terminate the MSA and the Other Agreements pursuant to
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained
herein, and other good and valuable consideration, the receipt
and adequacy of
which are hereby acknowledged, the Parties agree as follows:
1. Termination of the MSA. The MSA and Other Agreements are
hereby
terminated by mutual agreement of the Parties, without regard to
section 8.4 of
the MSA. Other than as set forth in this Agreement, there shall
be no continuing
obligations under the MSA or Other Agreements by either Party to
the other
including any obligations arising from the provision of Products
pursuant to the
MSA.
2. No Remaining Detention of Intraop Property. CDS agrees that
CDS has no
property interest in the Intraop Property described on
Attachment A. CDS further
agrees that such Intraop Property has been fully paid by Intraop
and is owned by
Intraop. CDS agrees that as of the Effective Date, it shall
provide full
cooperation and assistance to Intraop to allow Intraop to
collect any remaining
Intraop Property in the possession of CDS. Intraop's tender of
the First Payment
(as defined in paragraph 4 hereof) is made only upon Intraop
taking full
possession of all such Intraop Property.
3. Delivery of Components/Database and History Documents. The
Parties agree
that the items described on Attachment B represent the total
service stock in
CDS' possession, including excess and obsolete inventory, of
Components (as such
term is defined in the MSA) under Section 4.2 of the MSA. On and
subject to the
terms and conditions of this Agreement, Intraop agrees to
purchase and acquire
from CDS and CDS hereby sells, transfers, assigns and conveys
such Components to
Intraop and CDS agrees that it shall provide full cooperation
and assistance to
Intraop to allow Intraop to collect such Components from CDS'
facility as and
when reasonably requested by Intraop. Set forth on Attachment C
are certain
electronic database materials and product and vendor history
documentation (the
"Documentation") that were utilized by CDS in the production of
the Products.
CDS agrees that as of the Effective Date, CDS shall: (i) make
its facility
available to Intraop personnel and provide its reasonable
assistance to allow
Intraop the opportunity to package the Components for drayage
and removal by
Intraop through transportation arranged by Intraop and (iv)
cooperate with
Intraop personnel to transfer the Documentation (to the best of
CDS' ability) to
Intraop personnel.
4. Payment. Intraop has paid CDS the sum of twenty five thousand
United
States Dollars ($25,000) (the "First Payment"), the receipt of
which is hereby
acknowledged. Intraop shall pay to CDS a second payment of
Twenty Thousand
United States Dollars ($20,000) (the "Second Payment") on or
prior to thirty
(30) days following the Effective Date. Thereafter, Intraop
shall pay to CDS a
third payment of Twenty Thousand United States Dollars ($20,000)
(the "Third
Payment") on or prior to thirty (30) days following the date of
the Second
Payment. Thereafter, Intraop shall pay to CDS a fourth payment
of Twenty
Thousand United States Dollars ($20,000) (the "Fourth Payment")
on or prior to
thirty (30) days following the date of the Third Payment.
Thereafter, Intraop
shall pay to CDS a fourth payment of Fifteen Thousand United
States Dollars
($15,000) (the "Fifth Payment") on or prior to thirty (30) days
following the
date of the Fourth Payment. Collectively, the foregoing payments
totaling one
hundred thousand United States Dollars ($100,000) are herein
referred to as the
"Settlement Payment," and such Settlement Payment, in whole and
in part, is made
in consideration of the compromise between the Parties in this
Agreement.
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5. Assumption of Open Purchase Orders. On and subject to the
terms and
conditions of this Agreement, CDS hereby assigns all of its
interest in the
stand-alone open purchase orders listed on Attachment D ("Open
Purchase Orders")
and Intraop agrees to assume and become responsible for any
remaining payment
obligation for such Open Purchase Orders. CDS represents and
warrants that no
other contractual agreement was or remains in place with respect
to the subject
matter of the Open Purchase Orders other than as reflected in
such stand-alone
Open Purchase Orders themselves. CDS shall respond to inquiries
from sellers
under such Open Purchase Orders to contact Intraop for delivery
of any products,
materials and/or services under such Open Purchase Orders.
6. Release of Claims between the CDS and Intraop.
a. Except for claims arising out of the breach of this
Agreement, and
upon its receipt of the full Settlement Payment, CDS, for itself
and its
collective and respective agents, employees, officers,
attorneys, sureties,
insurers and other related entities, including its predecessors
(including
without limitation, CDS Group Corporation, a Delaware
corporation), and
affiliates (including, without limitation, C.D.S. Engineering,
Inc., a
California corporation, and as to all such affiliates, "CDS
Affiliated
Parties"), does hereby release and forever discharge Intraop,
its officers,
employees, attorneys, sureties, insurers and other related
entities
("Intraop Affiliated Parties") of and from any and all claims
(monetary or
otherwise), debts, liabilities, liquidated damages, costs,
actions,
judgments, demands, obligations, contracts, suits, expenses,
losses,
attorney's fees, damages and causes of action of any kind or
nature,
including claims for indemnity or contribution, arising out of
or related
to the MSA or the Other Agreements and the performance or
non-performance
of the obligations of Intraop thereunder, directly or
indirectly, which the
CDS may now or hereafter have or claim to have against Intraop
and any
Intraop Affiliated Party, including without limitation the CDS
Claims. Upon
its receipt of the full Settlement Payment, CDS, for itself and
on behalf
of the CDS Affiliated Parties, does hereby acknowledge that
Intraop has
performed all of its obligations, including payment obligations,
pursuant
to the MSA and Other Agreements and that CDS has been fully paid
for all
services or property provided by CDS.
b. Except for claims arising out of the breach of this
Agreement, and
upon the receipt by CDS of the full Settlement Payment, Intraop,
for and on
behalf of itself and the Intraop Affiliated Parties, does hereby
release
and forever discharge CDS and the CDS Affiliated Parties of and
from any
and all claims (monetary or otherwise), debts, liabilities,
liquidated
damages, costs, actions, judgments, demands, obligations,
contracts, suits,
expenses, losses, attorney's fees, damages and causes of action
of any kind
or nature, including claims for indemnity or contribution,
arising out of
or related to the MSA or the Other Agreements and the
performance or
non-performance of the obligations of CDS thereunder, directly
or
indirectly, which Intraop may now or hereafter have or claim to
have
against CDS, including without limitation the Intraop Claims.
Upon receipt
by CDS of the full Settlement Payment, Intraop does hereby
acknowledge that
CDS has no remaining obligations pursuant to the MSA and Other
Agreements,
including any obligations regarding latent defects or warranty
obligations.
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7. Waiver of California Civil Code section 1542. In addition to
the
specific and express releases set forth herein, each Party
acknowledges that
there is a risk that, subsequent to the execution of this
Agreement, it may
incur, suffer or sustain injury, loss, damage, costs, attorneys'
fees, expenses
or any of these, which are directly caused by or connected with
the matters
referred to in paragraph 6, and which are unknown and
unanticipated at the time
this Agreement is signed, and which are not presently capable of
being
ascertained. Each Party further acknowledges that there is a
risk that such
damages as are known may become more serious than any of them
now expects or
anticipates. Nevertheless, each Party acknowledges that this
Agreement has been
negotiated and agreed upon in light of those risks and each of
them hereby
expressly waives all rights each may have in any such unknown
claims and assumes
the risks that the facts and law pertaining to this dispute may
change or be
different than it is now known to each said Party, except as
specifically
otherwise provided in this Agreement. In doing so, each Party
has had the
benefit of counsel, and has been advised of, understands, and
knowingly and
specifically waives their rights under California Civil Code
Section 1542 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.
8. Cooperation. The Parties will execute all such f
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