Exhibit 10.45
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release
(“Agreement”) is entered into by and among Synapse Fund
I, LLC and Synapse Fund II, LLC (collectively,
“Synapse”), Go Industries, Inc., Kenneth A. Barnett,
Marion Bates, Philip V. Bates, Kate Hutchins Bates, Belinfer
Corporation, Leon A. Chiu, Colunga Living Trust, Jack Gregory,
Daniel G. Hall, Rudy Kranys, Sherry Kranys, Philip J. Monks, Susan
Monks, Irwin D. Novak, Jessica K. Novak, Judi M. Novak, Ryan T.
Powell, Taylor B. Powell, Martin Terry Rothman, Bruce E. Stimson,
Nancy Stimson, Gary Becker, Robert C. Strauss Grantor Retained
Interest Trust, Rena White Connor, and Mark H. Wholey Family LTD.
Partnership (collectively with Synapse, “Plaintiffs”),
Sutura, Inc. (“Sutura”), Anthony A. Nobles, Rhonda
Nobles, and Egbert Ratering (collectively with Plaintiffs and
Sutura, the “Parties”).
RECITALS
A. On June 30,
2005, Plaintiffs filed their Complaint for Involuntary Dissolution;
Removal of Directors, and Injunctive Relief against Anthony A.
Nobles, Egbert Ratering, and Sutura in the case entitled Go
Industries, Inc., et al. v. Anthony A. Nobles, et al. , Orange
County Superior Court, Case No. 05 CC00137 (the
“Dissolution Action”).
B. On June 30, 2005,
Synapse filed its related Shareholder Derivative Complaint for: (1)
Breach of Fiduciary Duty; (2) Misappropriation of Corporate
Funds; (3) Accounting; (4) Imposition of Constructive
Trust; (5) Injunctive Relief; and (6) Unjust Enrichment
against Anthony A. Nobles, Egbert Ratering, and Sutura in the case
entitled Synapse Fund I, LLC, etc. vs. Anthony A. Nobles, et
al. , Orange County Superior Court, Case No. 05 CC00136
(the “Derivative Action”).
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C. Both the Dissolution
Action and the Derivative Action are currently assigned to the
Honorable Thierry P. Colaw in Dept. CX 104 of the Orange County
Superior Court.
D. The Parties now
desire to settle their disputes and avoid the further cost, time,
and burden associated with the Dissolution Action and the
Derivative Action by entering into this Agreement.
NOW, THEREFORE, the Parties agree as
follows:
1. Court
Approval . This Agreement shall be contingent upon
court approval. The Parties agree to do everything reasonably
necessary to obtain court approval and support of the shareholders
of Sutura for this Agreement. Within 10 business days of the full
execution of this Agreement, Sutura shall file in the Derivative
Action a motion for approval of this Agreement. Sutura shall mail
notice of the hearing on the motion for approval to each of its
shareholders at least twenty-six (26) days before the hearing.
The notice shall inform the shareholders of their opportunity to
object to this Agreement and file a motion with the court to
intervene as a plaintiff, either on the shareholder’s own
behalf, or on behalf of Sutura, Inc in the Derivative Action. In
the event that a shareholder is permitted to intervene in the
Derivative Action, or the court does not grant the motion for
approval, this Agreement shall become voidable upon written notice
by any party mailed to all other parties within ten (10) days
after such party receives notice of the entry of the court’s
order upon the motion to intervene or the motion seeking
approval.
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2.
Consideration .
(a) Within 10 business days of the entry of the
court’s order approving this Agreement, Sutura will deliver
to Synapse, via Plaintiffs’ counsel, Susan L. Harrison, a
fully executed convertible note for $400,000.00 in the form
attached to this Agreement as Exhibit A. At the same time the
parties shall exchange executed copies of the Fifth Amended
Security Agreement, in the form attached as Exhibit B, the
Fifth Amended Patent Security Agreement, in the form attached as
Exhibit C, and the Fifth Amended Registration Rights Agreement, in
the form attached as Exhibit D.
(b) Concurrently with the delivery of the note referred to
in paragraph 2(a) above, Plaintiffs’ counsel shall execute
and deliver to counsel for Sutura, William S. O’Hare, for
filing with the court requests for dismissal with prejudice of both
the Derivative Action and the Dissolution Action.
(c) Effective upon Plaintiffs’ dismissal with
prejudice of both the Derivative Action and the Dissolution Action,
Anthony A. Nobles and Egbert Ratering agree that Anthony A. Nobles
and Egbert Ratering shall not again serve as CEO and CFO,
respectively, of Sutura until the earlier of August 1, 2008, or a
sale or change of control of Sutura. For purposes of this paragraph
2(c), a sale or change of control of Sutura will be deemed to occur
upon (A) the acquisition of Sutura by another entity by means
of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation,
but excluding any merger effected exclusively for the purpose of
changing the domicile of the corporation) or (B) a sale of all
or substantially all of the assets of the corporation; unless in
each of the foregoing clauses (A) and (B), the
corporation’s shareholders of record as constituted
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immediately prior to such transaction(s), acquisition or sale will,
immediately after such transaction(s), acquisition or sale (by
virtue of securities issued as consideration for the
corporation’s transaction(s), acquisition or sale or
otherwise) hold at least 50% of the voting power of the surviving
or acquiring entity.
3. Discharge, Release, and Covenant Not to
Sue.
(a) Each of the Parties, for themselves, derivatively on
behalf of Sutura, and for their respective heirs, executors,
administrators, representatives, trustees, agents, principals,
shareholders, servants, employees, attorneys, insurers,
predecessors and successors in interest, assigns, directors,
officers, members, managers, partners, parent corporations,
subsidiaries, affiliates, and all other persons, firms, or
corporations with whom or which any of them have been, are now, or
may hereafter be affiliated, an
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