A covenant not to sue is a contractual agreement that restricts one or more parties from filing claims against another. For example, in the world of mergers and acquisitions, buyers often request covenants not to sue from sellers. Signing the document is usually beneficial for both parties, as it helps avoid costly and lengthy litigation in the event of a failed merger or acquisition.
While a covenant not to sue restricts future claims from being made, the party signing the document is still free to file a lawsuit if it breaches the terms of that agreement. If one or more parties don't sign a covenant not to sue, then they are open for any claim and lawsuit.
RELEASE OF CLAIMS AND COVENANT NOT TO SUE
This Release of Claims and Covenant Not to Sue (“Release”) is executed as of the day of December, 2004 by [ , an individual resident of the State of [ ]] 1 [[ ], a [ ] corporation] 2 (“Releasor”).
In consideration of a certain agreement by and between Asconi Corporation, a Nevada corporation (the “Company”), and the Releasor, entered into on December , 2004, whereby the Company has agreed to reduce the purchase price of its securities sold to certain “accredited” investors (including both individuals and institutions) in the December 30, 2003 private placement of the Company’s securities (the “2003 Private Placement”) from $5.00 to $3.50 per share by (x) reducing the exercise price of the warrants sold in the 2003 Private Placement to $5.00 (the “Warrant Repricing”) and (y) issuing additional common stock shares of the Company (the “Share Issuance”), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Releasor, for itself and its [subsidiaries, successors-in-interest, representatives, agents and assigns,] 3 [heirs, administrators, executors, representatives, beneficiaries and assigns] 4 hereby irrevocably and unconditionally releases and discharges each of the Company, together with its respective officers, directors, shareholders, partners, employees, heirs, administrators, executors, representatives, beneficiaries, attorneys and assigns (collectively, the “Releasees”), from any and all claims, demands, causes of action, actions, judgments, liens, indebtedness, costs, damages, obligations, attorneys’ fees, losses and liability of whatever kind and character, whether known or unknown, foreseen or unforeseen, in law or equity, liquidated or unliquidated, whether asserted personally, derivatively or in any other capacity, arising from, referring to, relating to or in connection with, the beginning of time to the date hereof, including, without limiting the foregoing, those specifically related in any way to the Releasor’s purchase of the Company’s securities in the 2003 Private Placement (all of the foregoing being collectively referred to herein as the “Claims”).
The Releasor covenants and agrees not to sue or bring any action in law, or in equity, including, but not limited to, an action in any court, forum, or arbitration proceeding whether by original process or demand, counterclaim, cross-claim, third-party process, impleader, claim for indemnity or contribution or otherwise against the Releasees, and their successors, and assigns, arising from, referring to, relating to, or in connection with, any of the Releasees with respect to any claim (a) related in any way to the Claims, and/or (b) otherwise released herein.
The Company hereby agrees to effect the Share Issuance and Warrant Repricing no later than ten (10) business days of the date of this Release.
| 1 | To be inserted if Releasor is an individual. |
| 2 | To be inserted if Releasor is a corporation. |
| 3 | To be inserted if Releasor is a corporation. |
| 4 | To be inserted if Releasor is an individual. |
In connection with the above-referenced Share Issuance and Warrant Repricing, the Releasor understands and hereby acknowledges that:
1. The shares of the Company’s common stock issued in connection with the Share Issuance (the “Shares”) and the warrants to be issued in connection with the Warrant Repricing (the “Repriced Warrants”) have not been registered under the Securities Act of 1933, as amended (the “Act”) or any applicable state securities laws;
2. The Releasor cannot sell such Shares, the Repriced Warrants or the shares of common stock issuable upon exercise of the Repriced Warrants (the “Warrant Shares”) unless they are registered under the Act and any applicable state securities laws or unless exemptions from such registration requirements are available; a legend will be placed on any certificate or certificates evidencing the Shares, stating that such securities have not been registered under the Act and setting forth or referring to the restrictions on transferability and sales of the securities; the Company will place stop transfer instructions against the securities and the certificates for the securities to restrict the transfer thereof; and the Company has no obligations to register the securities or assist the undersigned in obtaining an exemption from the various registration requirements except as set forth herein or therein. The Releasor agrees not to resell the Shares, the Repriced Warrants, or the Warrant Shares without compliance with the Act and any applicable state securities laws;
3. The Releasor will acquire the Shares, the Repriced Warrants and the Warrant Shares solely for the Releasor’s own account for investment purposes only and not with a view toward resale or distribution, either in whole or in part; has no contract, undertaking, agreement or other arrangement, in existence or contemplated, to sell, pledge, assign or otherwise transfer the Shares, the Repriced Warrants and the Warrant Shares to any other person; and agrees not to sell or otherwise transfer the Shares, the Repriced Warrants and the Warrant Shares unless and until such securities are subsequently registered under the Act and any applicable state securities laws or unless an exemption from any such registration is available;
4. The Shares, the Repriced Warrants and the Warrant Shares represent substantial risks, including the fact that the Releasor could lose the entire amount of the Releasor’s investment,
5. Either alone or together with the Releasor’s purchaser representative (as that term is defined in Regulation D under the Act), the Releasor has knowledge and experience in financial and business matters that the Releasor is capable of evaluating the merits and risks of an investment in the Company;