Marital Settlement Agreement

Settlement Agreement

THIS SETTLEMENT AGREEMENT (this "Agreement"), subject to the filing and entry of the Consent Judgment, is made and entered into effective as of between ("ABC"), on the one hand, and and (collectively "Defendants"), on the other hand, with respect to the claims set forth in a civil action pending in the United States District Court for the Northern District of California (the "Court") styled , Case No. (the "Lawsuit").

THE PARTIES AGREE AS FOLLOWS:

Section 1. Consent Judgment. ABC and Defendants stipulate to entry of the Confidential Order and Judgment (the "Consent Judgment") attached to this Agreement as Exhibit A, which exhibit is incorporated as part of this Agreement as if fully set forth herein.

Section 2. Acknowledgment of Continuing Obligations. Defendants acknowledge Doe's continuing obligations, under law and the terms of his ABC Employee Nondisclosure Agreement, not to disclose or use any of ABC's trade secrets.

Section 3. Identification of ABC Trade Secrets. Having had the benefit of formal discovery in the Lawsuit, including the opportunity to cross-examine Doe concerning the nature of his work at XYZ, ABC has identified, in its answer to interrogatory no. 25 in the Lawsuit (the "Subject List"), the trade secrets to which it believes Doe was exposed and which it feels may be put to some level of risk by virtue of his employment at XYZ. It is understood that the Subject List, while a confidential document, may be kept and viewed by any responsible managerial employee of XYZ. ABC has also prepared and submitted to the Examiner and to counsel for Defendants a "Detail List" which describes the matter on the Subject List in detail sufficient for the Examiner to perform his duties as described herein. The Detail List may be viewed by Doe as necessary, in the presence of the Examiner, during the period of the Examiner's service hereunder. A single copy thereof may be retained by the Examiner and by counsel of record for Defendants; the Detail List may not otherwise be made available or used for any other purpose. In preparing the Subject List and the Detail List, ABC has exercised its best effort to be as inclusive as possible, in order that Defendants and the Examiner may be sufficiently informed to perform their obligations hereunder.

Section 4. Payment. XYZ shall pay to ABC, the sum of , on the following terms:

Section 5. Mutual Releases.

5.1 Except for obligations assumed or acknowledged under this Agreement, ABC for itself and its successors, and assigns hereby completely releases and forever discharges XYZ and Doe and their representatives, past and present shareholders, officers, directors, agents, employees, attorneys, insurers, successors, and assigns, from all claims, rights, demands, actions, obligations, liabilities, and causes of action of any and every kind, nature or character, known or unknown, that they may now have or have ever had arising from, or in any way related to, the Lawsuit.

5.2 Except for obligations assumed or acknowledged under this Agreement, XYZ and Doe for themselves and their heirs, successors, and assigns hereby completely release and forever discharge ABC and its representatives, past and present shareholders, officers, directors, agents, employees, attorneys, insurers, successors, and assigns, from all claims, rights, demands, actions, obligations, liabilities, and causes of action of any and every kind, nature or character, known or unknown, that they may now have or have ever had arising from, or in any way related to, the Lawsuit.

Section 6. Release of Unknown Claims. The preceding paragraph is a full and final release covering all known as well as unknown and unanticipated injuries, debts, claims or damages for events, transactions or occurrences prior to the date of this Agreement that arose from or are in any way related to the Lawsuit. With respect to unknown claims related to the Lawsuit, the parties expressly waive any and all rights or benefits they may now have, or in the future may have, under any law relating to the release of unknown claims, including without limitation Section 1542 of the California Civil Code, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in its favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

Section 7. Covenant Not To Sue. Neither ABC nor Defendants shall maintain or initiate against the other or any person covered by the foregoing release any action or proceeding covered by the foregoing release, nor shall they assist or participate in any such proceeding, including proceedings brought by third parties, except as required by law.

Section 8. Examiner. The parties hereby appoint to act as Examiner, for the purpose of reviewing compliance by Defendants with their obligations not to use or disclose ABC's trade secrets in accordance with this Agreement and the Consent Judgment. If for any reason refuses or becomes unable to continue to serve in this capacity, and the parties are unable to agree on a successor, then a successor Examiner with comparable qualifications shall be appointed by the Court on application of any party. The Examiner shall be provided full access, on reasonable notice, to Defendants' facilities and records of all types, and may when in his judgment it is necessary interview employees of Defendants. The Examiner may also have access in his discretion to ABC and its records and personnel for the purpose of a full understanding of the Detail List. The Examiner shall perform at least two inspections of Defendants during the first twelve months from the execution of this Agreement, and at least one inspection during each of the following two years, with a final inspection to take place within 36 to 38 months following execution of this Agreement. The Examiner shall be paid for his work one half each by ABC and XYZ, and shall execute the form of undertaking required by the Stipulated Protective Order in the Action. In the event that the Examiner believes that there has been any violation of this Agreement or the Consent Judgment, he will so inform counsel for both parties in writing, stating his reasons therefor, and ABC may thereafter seek relief in accordance with the dispute resolution provisions of Section 11 below.

Section 9. Representations and Warranties

9.1 The parties each warrant that in entering into and performing this Agreement, they will not breach any obligation to any third party.

9.2 The parties each represent that in entering into this Agreement, they rely on no promise, inducement, or other agreement not expressly contained in this Agreement; that they have read this Agreement and discussed it thoroughly with their respective legal counsel; that they understand all of the provisions of this Agreement and intend to be bound by them; and that they enter into this Agreement voluntarily.

Section 10. Confidentiality.

10.1 The terms of this Agreement shall be kept confidential except as required by law and as authorized in paragraph 10.3 below.

10.2 Each party shall return to the other party all documents produced by the other party during discovery and all copies thereof, subject to the following exceptions:

10.2.1 Counsel for each party may keep, for archival purposes, copies and extracts of (a) deposition transcripts, including exhibits, (b) all papers filed with the Court, and (c) all work product and attorney-client communications.

10.2.2 Except as expressly set forth, this Agreement shall not abrogate the Stipulated Protective Order entered in the Lawsuit.

10.3 Agreed Public Statement. The parties agree to jointly submit a statement in a press release or other public announcement in the form agreed upon by the parties attached as Exhibit B. Except to the extent otherwise required by law, the parties also agree to limit all future statements concerning the Lawsuit and this settlement to what is set forth in Exhibit B.

Section 11. Dispute Resolution.

11.1 If a dispute arises out of or relates to this Agreement or any violation hereof or of the Consent Judgment, the parties shall first attempt in good faith to negotiate the dispute for a period of ten days, by discussion between senior management personnel and the appropriate exchange of factual and legal information. If this process of direct negotiation is not successful, the parties agree next to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Rules, before resorting to arbitration, litigation or some other dispute-resolution procedure.

11.2 If negotiation and mediation are unsuccessful, then the parties shall proceed to arbitration under the Commercial Arbitration Rules of the American Arbitration Association. There shall be a single arbitrator, who shall be a lawyer with experience in serving the gizmo industry. Discovery may be ordered in the discretion of the arbitrator; but the proceedings shall be completed (that is, the arbitrator's award shall be made) no later than 120 days following service of the first notice to arbitrate. The arbitrator shall issue a reasoned opinion, including findings of facts. The arbitrator shall award costs and reasonable attorneys fees to the prevailing party; and in the event that litigation is necessary to compel and/or enforce arbitration, the court shall award costs and reasonable attorneys fees to the prevailing party therein.

11.2 [Alternative paragraph] If negotiation and mediation are unsuccessful, then either party may pursue its remedies in the Court for any claim then existing against the other, including an application for contempt of the Consent Judgment.

11.3 Nothing in this Agreement shall preclude any party at any time from filing an action in the Court to seek a temporary or preliminary injunction or other form of preventive relief which is necessary to prevent irreparable harm, or as necessary to stop the running of any applicable statute of limitations. Nothing in this Agreement shall preclude Defendants from seeking a modification of the Consent Judgment to relieve them from the restraint thereof as to any of the ABC trade secrets that Defendants can show has become generally known without any participation by them or anyone on their behalf; provided that Defendants shall first have given reasonable notice to ABC of their intent to seek such modification.

Section 12. Miscellaneous

12.1 No Reliance Upon Representations. Each party to this Agreement expressly acknowledges that the facts on which it may now be relying may hereafter prove to be untrue or materially different. Each party represents that it has made such investigations as are necessary to execute the releases herein. Each party to this Agreement, however, accepts the risk and fully understands that even if such facts are not true or if there is a material change in the facts or circumstances now believed by it to be true, this Agreement shall nevertheless be and remain valid, effective, and binding. Each party warrants that, in deciding to enter into this Agreement, they are not relying upon any representation, warranty, promise, condition, or term which is not explicitly and expressly set forth herein.

12.2 Covenants Regarding Nonassignment of Claims. Each of the parties to this Agreement represents and warrants that it has not assigned, conveyed, granted, transferred, or otherwise disposed of any of the claims released by this Agreement. Each party covenants that it will not make, assert, or maintain against any party it has released in this Agreement any claim, demand, action, suit, or proceeding for anything released herein. In the event that any party hereto breaches any of the representations, warranties, or covenants contained in this Paragraph, such party shall indemnity, defend, and hold harmless any other party hereto against any resulting claim, demand, damage, debt, liability, account, action, or cause of action, or cost or expense, including attorneys' fees. This Agreement may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit, or other proceeding that may be instituted, prosecuted, or attempted in breach of this Agreement.

12.3 Binding Effect. This Agreement governs the rights of, binds, and inures to the benefit of all parties hereto, their predecessors and successors, and past, present, and future affiliates, subsidiaries, parent or related entities, joint ventures, sureties, partners, partnerships, assigns, officers, directors, shareholders, employees, agents, consultants, insurers, attorneys, administrators, nominees, trustees, officials, representatives, and heirs.

12.4 Compromise. It is understood and agreed that this Agreement is the result of a good faith compromise settlement of disputed claims, and that this Agreement and the releases contained herein shall not be taken or construed to be an admission of any liability, responsibility, fault, or wrongdoing by any of the parties hereto, each of whom continues to deny and disclaim any such liability, responsibility, fault, or wrongdoing. Each of the parties hereto is entering into this Agreement to avoid the expense, disruption, and uncertainty of further litigation.

12.5 Representation By Counsel. This Agreement is entered into freely and voluntarily. The parties hereto acknowledge that they have been represented by counsel of their own choice in the negotiations that preceded the execution of this Agreement, and in connection with the preparation and execution of this Agreement. Each of the parties hereto executes this Agreement with full knowledge of its significance and with the express intention of effecting its legal consequences.

12.6 Construction of Agreement. This Agreement is the product of negotiation and preparation by and among each party hereto and its attorneys. Therefore, the parties acknowledge and agree that this Agreement shall not be deemed to have been prepared or drafted by one party or another, and that it shall be construed accordingly. The parties expressly waive the provisions of California Civil Code Section 1654.

12.7 Modification of Agreement. No supplement, modification, waiver, or amendment with respect to this Agreement shall be binding unless executed in writing by the party against whom enforcement of such supplement, modification, waiver, or amendment is sought.

12.8 Waiver. The waiver by any party of one breach or default under this Agreement shall not constitute the waiver of any subsequent breach or default.

12.9 Severability. If one or more provisions of this Agreement are judicially determined to be illegal or otherwise unenforceable, in whole or in part, they shall be deemed severable from the remainder of this Agreement and shall in no way affect, impair or invalidate any other provision of this Agreement. If such a provision is deemed invalid due to its scope or breadth, the provision shall be deemed valid to the extent of the scope or breadth permitted by law.

12.10 Notices. All notices given in connection with this Agreement shall be in writing and shall be deemed given upon actual receipt by the addressee. Notices shall be personally delivered or sent by telex or telecopier (with prompt confirmation by registered or certified air mail, postage prepaid) or by registered or certified air mail, postage prepaid, addressed to the party to be notified at the following address, or at such other address as the party may designate by notice:

ABC:

with copy to:

XYZ:

with copy to:

John Doe:

with copy to:

12.11 Integration. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof.

12.12 Captions. Titles or captions contained in this Agreement are inserted for convenience of reference only and shall not be considered in the interpretation of this Agreement.

12.13 Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of California, as applied to contracts formed and to be performed solely in the State.

12.14 Counterparts. This Agreement may be executed in counterparts.

12.15 Signatories' Authority. All individuals who execute this Agreement warrant and represent that they have the authority to do so both on their own behalf and, if they execute this Agreement on behalf of a legal entity, that they have the authority to do so and to bind the legal entity on whose behalf they have acted.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by the respective duly authorized representatives as of the date first set forth above.

EXHIBIT A

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

ABC, INC., a corporation,

Plaintiff,

vs.

XYZ, INC., a corporation, and JOHN DOE,

Defendants.

No.

CONFIDENTIAL ORDER AND JUDGMENT

The parties hereto having agreed to a settlement of the matters in issue between them and to the entry of this Confidential Order and Judgment, it is hereby ordered and adjudged as follows:

1. This Court has jurisdiction over plaintiff, ABC, Inc., and over defendants, XYZ, Inc. and John Doe.

2. The parties are ordered to comply with all executory terms of the Settlement Agreement entered into among them and dated as of . Without limiting the foregoing, XYZ is ordered to comply with its payment obligations set forth in section 4 of the Settlement Agreement.

3. Defendants XYZ, Inc., John Doe, their successors and assigns, their agents, servants, employees, and all persons in active concert or participation with them, or with any of them, are hereby permanently enjoined from using or disclosing any of ABC's trade secrets, as described in the Subject List or Detail List which have been exchanged between counsel, unless and until such information becomes generally known without participation in any way by any of such persons, and then only upon application to this Court, with notice to ABC, to amend this decree based on such changed circumstances.

4. This Court retains jurisdiction to consider, upon application by any party, any violation of the terms of the Settlement Agreement, this Confidential Order and Consent Judgment, or of the Stipulated Protective Order entered in this action.

5. This Confidential Order and Consent Judgment shall be entered and filed under seal.

6. The claims of the complaint and cross-complaint are terminated with entry of this judgment. Each party shall bear its own costs.