CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(b)(4) AND 240.24B-2
FOR PORTIONS OF THIS DOCUMENT MARKED AS FOLLOWS: [***]. CONFIDENTIAL INFORMATION
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

CONFIDENTIAL SETTLEMENT AGREEMENT

This CONFIDENTIAL SETTLEMENT AGREEMENT (“Agreement”) is made and entered into as
of this 26th day of August, 2016 by and between IRONCLAD PERFORMANCE WEAR
CORPORATION (“IRONCLAD”), a Nevada corporation having its principal place of
business at 1920 Hutton Court, Suite 300, Farmers Branch, Texas 75234, and ORR
SAFETY CORPORATION (“ORR SAFETY”), a Kentucky corporation having its principal
place of business at 11601 Interchange Dr., Louisville, Kentucky 40229 (Ironclad
and ORR Safety are each a “Party” and are collectively the “Parties”).

RECITALS:

A.       The Parties entered into that certain Exclusive License and
Distributorship Agreement dated January 6, 2009, and amended on January 27, 2015
(the “Distributorship Agreement”);

B.       The Parties also entered into that certain Sub-Distributorship
Agreement dated July 22, 2010, and amended on January 27, 2015 (the
“Sub-Distributorship Agreement”);

C.       The Parties also entered into that certain Memorandum of Understanding
dated December 11, 2013 relating to the Distributorship Agreement and the
Sub-Distributorship Agreement (the “Memorandum of Understanding”) (collectively
the Distributorship Agreement, the Sub-Distributorship Agreement and the
Memorandum of Understanding are referred to herein as the “Distribution
Agreements”);

D.       Ironclad filed suit against ORR Safety on September 28, 2015 in the
District Court of Dallas County, Texas styled Ironclad Performance Wear
Corporation v. ORR Safety Corporation, Cause No. DC-15-11878 seeking, among
other things, damages based on alleged breaches of the Distributorship
Agreement;

E.       On October 23, 2015 ORR Safety filed a counterclaim seeking damages
based on alleged breaches of the Distributorship Agreement and the
Sub-Distributorship Agreement, and alleged tort claims (the “Counterclaim”). On
the same day, ORR Safety removed the case to the United States District Court
for the Northern District of Texas, Dallas Division, and the case was
subsequently styled Ironclad Performance Wear Corporation v. ORR Safety
Corporation, Case No. 15-cv-03453-D (N.D. Tex.) (the “Litigation”);

F.       Each Party denies the claims brought against it in the Litigation; and

G.       The Parties entered into that certain Agreement in Principle to settle
the Litigation on August 10, 2016 (the “Agreement in Principle”) which
contemplates that the Parties enter into this Agreement.

 

 

CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(b)(4) AND 240.24B-2
FOR PORTIONS OF THIS DOCUMENT MARKED AS FOLLOWS: [***]. CONFIDENTIAL INFORMATION
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

 AGREEMENT:

1.       NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

2.       [***]. Within five (5) business days of filing of the Stipulation of
Dismissal With Prejudice of the Litigation, a copy of which is attached as
Attachment A, [***] shall pay [***] to [***] in immediately available funds
(“Settlement Proceeds”). Further, [***] shall be responsible for all federal,
state, and local taxes related to its receipt of the Settlement Proceeds. [***]
agrees to defend and indemnify the [***] Released Parties (as defined in Section
[***]) for any tax liability or penalty assessed against any [***] Released
Party as a result of the receipt by [***] of the payment of the Settlement
Proceeds, and agrees that [***] shall bear any and all costs, including, but not
limited to, penalties and attorneys' fees, related to any such assessment
against any [***] Released Party, including any such costs incurred by any [***]
Released Party.

3.       Delivery of Certain Gloves to [***]. Within thirty (30) business days
of the dismissal of the Litigation, [***] shall deliver, DDP to [***] , what was
shown on an inventory sheet on August 10, 2016 to be approximately [***] gloves
in assorted sizes, an inventory of which is attached as Attachment B (the “[***]
Gloves”). [***] shall receive the [***] Gloves “as is” without any rights of
return or exchange; however, [***] represents and warrants that the [***] Gloves
are merchantable, new, and in good condition, and that the [***] Gloves can be
sold as the same.

4.       Termination of All Existing and Prior Written Agreements. The
Distribution Agreements, and all other agreements between the parties, are and
remain terminated, with no surviving provisions. Any rights under such
Distribution Agreements are subject to the releases provided in this Agreement.

5.       Distribution Rights. ORR Safety has the non-exclusive right to
distribute any “KONG” safety gloves (all sizes), and all other Ironclad gloves
available generally for distribution to all Ironclad distributors, pursuant to
the terms of the Non-Exclusive Distribution Agreement attached as Attachment C.

6.       The Patent. ORR Safety represents and warrants to Ironclad that, to the
best of its knowledge, Attachment D constitutes a true and complete list of the
manufacturers and catalogue styles of all gloves that it currently distributes,
sells or offers for sale as of the date of the Agreement in Principle (the
"Pipeline Gloves"). ORR Safety further represents and warrants to Ironclad that,
to the best of its knowledge and other than certain non-engineered gloves made
to specification for private label, all of the Pipeline Gloves are standard
catalogue items of the respective manufacturers and that none of the Pipeline
Gloves are specifically made as a “custom” style for distribution or sale by ORR
Safety. Ironclad agrees that ORR Safety may continue to sell the Pipeline
Gloves, irrespective of whether such Pipeline Gloves actually or allegedly
infringe on the U.S. Patent No. 9,241,519 (filed Sept. 19, 2008) (the "Patent").
Further, Ironclad covenants not to sue ORR Safety or its Affiliates (as defined
below), or any of their respective directors, managers, officers, employees,
agents, attorneys, representatives, successors or assigns, nor any customer or
distributor with respect to those Pipeline Gloves purchased from ORR Safety, nor
any of their respective directors, managers, officers, employees, agents,
attorneys, representatives, successors or assigns (collectively, “Downstream
Acquirors”), based on any alleged infringement of the Patent with as a result of
the purchase or sale of any of the Pipeline Gloves. For the sake of clarity,
nothing in this Agreement shall prevent Ironclad from suing any manufacturer,
distributor or any other third party who distributes or sells any Pipeline
Gloves to ORR Safety, and ORR Safety expressly agrees to cooperate with and
provide reasonable assistance to Ironclad in connection with any such suit. To
the extent Ironclad reasonably believes ORR Safety is selling or distributing
any gloves other than the Pipeline Gloves that allegedly infringe the Patent,
Ironclad shall provide ORR Safety at least sixty (60) days’ prior written notice
before Ironclad files any litigation alleging infringement of the Patent against
ORR Safety or any party Ironclad actually knows to be a Downstream Acquiror.
Said notice shall provide a description of the basis of Ironclad’s assertions in
reasonable detail, and provide ORR Safety the opportunity to cure any alleged
infringement or to discontinue selling (and/or cause any such Downstream
Acquiror the opportunity to cure any alleged infringement or to discontinue
selling) the gloves in question, without further recourse by Ironclad. Ironclad
agrees that the list of Pipeline Gloves contained in Attachment D will be
considered “Confidential” as that it is defined in the January 15, 2016 Agreed
Protective Order (DN-25) (the “Protective Order”), and that Ironclad will not
publish or disseminate the same.

 

 

 

CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(b)(4) AND 240.24B-2
FOR PORTIONS OF THIS DOCUMENT MARKED AS FOLLOWS: [***]. CONFIDENTIAL INFORMATION
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

7.       Releases by Ironclad. [***], Ironclad, for itself and its successors
and assigns, and for all other persons or entities claiming by, through or under
any of them, hereby fully and forever remises, releases, acquits and discharges
ORR Safety and its Affiliates and their respective directors, managers,
officers, employees, agents, attorneys, distributors, representatives,
successors, parent companies, subsidiary companies, and assigns (each an “ORR
Safety Released Party” and collectively, the “ORR Safety Released Parties”), and
each of them, of and from any and all manner of actions, causes of action,
suits, sums of money, accounts, reckonings, covenants, controversies,
agreements, promises, damages, judgments, proceedings, executions, debts,
obligations, liabilities, liens, security interests, claims and demands of any
nature whatsoever, whether at law, in equity or otherwise, whether in tort,
contract or otherwise, whether pursuant to any statute, ordinance, regulation,
rule of common law or otherwise, whether direct or indirect, whether punitive or
compensatory, whether known or unknown, whether presently discoverable or
undiscoverable, whether suspected or claimed, and whether fixed, contingent or
otherwise (collectively, “Claims”), which Ironclad ever had, now has or may have
against any ORR Safety Released Party, or which any Ironclad Released Party ever
had, now has or may have against any ORR Safety Released Party, in either case
based in whole or in part on any contract, agreement, arrangement, commitment,
loan, advance, offer, facts, conduct, activities, omissions, transactions,
events or circumstances, whether known or unknown, which may now exist or which
may have existed, occurred, happened, arisen or transpired at any time prior to
or on the date hereof, including without limitation, any Claims related to or
arising from the Distribution Agreements, the Litigation, or any claims made by
or which could have been made by any party in the Litigation. In connection with
the releases granted in this Section 7 and in Section 8, the term “Affiliate”
and “Affiliates” of a Party, means and refers to any other entity that, directly
or indirectly, controls, is controlled by or is under common control with, that
Party. For purposes of this definition, “control” (including, with correlative
meaning, the terms “controlled by” and “under common control with”), as used
with respect to any entity, shall mean the possession, directly or indirectly,
of the power to direct and/or cause the direction of the management and policies
of such entity, whether through the ownership of voting securities, by contract
or otherwise.

8.       Releases by ORR Safety. Concurrently with the effectiveness of the
release being given in Section 7, ORR Safety, for itself and its successors and
assigns, and for all other persons or entities claiming by, through or under any
of them, hereby fully and forever remises, releases, acquits and discharges
Ironclad and its Affiliates (including Ironclad Nevada, Ironclad California, and
Ironclad Performance Wear Corporation, Indonesia) and their respective
directors, managers, officers, employees, agents, attorneys, distributors,
representatives, heirs, personal representatives, successors, assigns and Vibram
USA, Inc. and Vibram S.p.A., and each of their respective Affiliates (each an
“Ironclad Released Party” and collectively, the “Ironclad Released Parties”),
and each of them, of and from any and all Claims which ORR Safety ever had, now
has or may have against any Ironclad Released Party, or which ORR Safety ever
had, now has or may have against any Ironclad Released Party, in either case
based in whole or in part on any contract, agreement, arrangement, commitment,
loan, advance, offer, facts, conduct, activities, omissions, transactions,
events or circumstances, whether known or unknown, which may now exist or which
may have existed, occurred, happened, arisen or transpired at any time prior to
or on the date hereof, including without limitation, any Claims related to or
arising from the Distribution Agreements, the Litigation, or any claims made by
or which could have been made by any party in the Litigation.

9.       Waiver and Relinquishment of Rights Under Civil Code Section 1542. The
Parties hereby acknowledge that they may hereafter discover facts different
from, or in addition to, those which they now claim or believe to be true with
respect to the claims released herein, and agree that this Agreement shall be
and remain effective in all respects notwithstanding the discovery of such
different or additional facts. To the extent it applies, the Parties hereby
acknowledges that it is knowingly and voluntarily waiving its rights under
Section 1542 of the California Civil Code, which provides:

 

 

CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(b)(4) AND 240.24B-2
FOR PORTIONS OF THIS DOCUMENT MARKED AS FOLLOWS: [***]. CONFIDENTIAL INFORMATION
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

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 STATEMENT WITH THE DEBTOR.

The Parties intend the releases contained in Sections 7, 8 and 9 to be general,
unconditional releases in the broadest sense.

10.       Distributors and Resellers. The Parties acknowledge that certain
claims in the Litigation revolved around Parties’ relationships with
manufacturers, distributors, and resellers of gloves. For the avoidance of
doubt, the releases given in Sections 7 and 8 release all claims by Ironclad and
ORR Safety against the other for any alleged improper acts or omissions of the
Parties that relate in any way to relationships with manufacturers,
distributors, and resellers of gloves, including but not limited to Vibram USA,
Inc. and Vibram S.p.A.

11.       Consultation with Legal Counsel, etc. The Parties acknowledge and
agree that (a) the releases in Sections 7 and 8 of this Agreement have been
specifically negotiated and are essential and material terms of this Agreement
and a material part of the consideration for the execution and delivery of this
Agreement, (b) the Parties have had the opportunity to consult with legal
counsel of their own choosing prior to signing this Agreement and accepting the
provisions of this Agreement, including but not limited to the releases set
forth in Sections 7 and 8 of this Agreement, and the Parties voluntarily and
knowingly have signed this Agreement and accept and agree to the provisions of
this Agreement, including but not limited to the releases set forth in Sections
7 and 8 of this Agreement.

12.       Dismissal With Prejudice. Upon execution of this Agreement, the
Parties shall file in the Litigation a Stipulation of Dismissal with Prejudice
in the form substantially similar to that attached as Attachment A. Each Party
shall bear its own attorneys’ fees in carrying out this provision.

13.       Amendments, etc. No waiver, termination, amendment or other
modification of any provision of this Agreement, and no consent to any departure
by the Parties from any provision of this Agreement, will in any event be
effective unless the same shall be in writing and signed by the Parties (or any
of their successors), and then such waiver of consent will be effective only in
the specific instance and for the specific purpose for which it is given;
provided that no waiver, termination, amendment, other modification or consent,
will amend or otherwise modify Sections 7 or 8 of this Agreement.

14.       Entire Agreement. This Agreement constitutes the entire Agreement by
and among Ironclad and ORR Safety with respect to the subject matter of this
Agreement and supersedes all prior agreements, understandings and negotiations,
both written and oral, by and between the Parties with respect to the subject
matter of this Agreement, including without limitation, the Agreement in
Principle. No representation, warranty, inducement, promise, understanding or
condition which is not set forth in this Agreement has been made or relied upon
by the Parties.

15.       No Waiver, Remedies Cumulative. No failure by any of the Parties to
exercise, and no delay by any such Party in exercising any power, right or
remedy under this Agreement will operate as a waiver of such power, right or
remedy, and no single or partial exercise of any such power, right or remedy
will preclude the further exercise of such power, right or remedy or any other
power, right or remedy. The rights and remedies provided in this Agreement will
be cumulative and not exclusive of any rights or remedies provided by law.

 

 

 

CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(b)(4) AND 240.24B-2
FOR PORTIONS OF THIS DOCUMENT MARKED AS FOLLOWS: [***]. CONFIDENTIAL INFORMATION
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

16.       No Third Party Beneficiaries. No provision in this Agreement is
intended or shall create any rights with respect to the subject matter of this
Agreement in any third party, other than with respect to third parties that are
expressly released pursuant to the terms of Sections 7 and 8.

17.       Costs and Expenses. All Parties shall pay their own costs and legal
fees relating to this Agreement. The consideration and payments described herein
shall be the total paid or provided, and neither Party may file a motion for
attorneys’ fees with the United States District Court for the Northern District
of Texas, Dallas Division.

18.       Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

19.       Captions. The headings of the Articles, Sections, Subsections,
Paragraphs and other divisions of this Agreement are included for convenience of
reference only, and will not in any way limit or affect the construction or
interpretation of any provision of this Agreement.

20.       Governing Law. This Agreement will be governed by, and construed in
all respects in accordance with, the laws of the State of New York without
regard to the conflicts of law rules of any state.

21.       Notices. All notices, requests, demands, directions, consents and
other communications to any party under or in connection with this Agreement
will be in writing and will be sent via certified or registered mail, return
receipt requested, via telephone facsimile transmission, via personal delivery,
or via express courier or delivery service, addressed to such party at such
party's address or telephone facsimile number as will be designated by such
party in a written notice given to the other party complying as to delivery with
the terms of this Section 21:

if to ORR Safety:

Jim Herr

ORR Safety Corporation

General Counsel

11601 Interchange Drive

Louisville, Kentucky 40229

jimh@orrcorp.com

 

with a copy to:

 

Benjamin C. Fultz

Fultz Maddox Dickens PLC

101 S. Fifth Street, 27th Floor

Louisville, Kentucky 40202

bfultz@fmdlegal.com

 

if to Ironclad:

 

William M. Aisenberg

Executive Vice President & Chief Financial Officer

Ironclad Performance Wear

1920 Hutton Court, Suite 300

Farmers Branch, Texas 75234

Bill.Aisenberg@ironclad.com

 

 

 

 

CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(b)(4) AND 240.24B-2
FOR PORTIONS OF THIS DOCUMENT MARKED AS FOLLOWS: [***]. CONFIDENTIAL INFORMATION
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

With a copy to:

 

Michael A. Sherman

Stubbs Alderton & Markiles, LLP

15260 Ventura Blvd., 20th Floor

Sherman Oaks, California 91403

masherman@stubbsalderton.com

 

All such notices, requests, demands, directions, consents and other
communications will be deemed given when given and receipted for (or upon the
date of attempted delivery when delivery is refused).

 

22.       Acknowledgement. Each of the Parties acknowledges that he, she or it
has read this Agreement and that he, she or it fully knows, understands, and
appreciates this Agreement and executes it voluntarily and of his, hers or its
own free will. By executing this Agreement, each Party signifies his, hers or
its assent to and willingness to be bound by its terms. The individual executing
on behalf of any entity represents that he or she is authorized to execute this
Agreement on its behalf.

 

23.       Confidentiality. The Parties agree that, subject to public reporting
requirements, the terms of this Agreement shall be confidential and that the
terms shall not be disclosed to any individual other than the Party’s employees,
attorneys, consultants, or accountants. Ironclad agrees that it shall use all
reasonable efforts and file all necessary papers with the Securities and
Exchange Commission (the “SEC”) to treat this Agreement as confidential with
respect to all items for which confidential treatment may be sought under the
rules and regulations of the SEC.

 

24.       Public Statements. Each of the Parties agree that to the extent any
Party makes any public statements about the Agreement, that Party shall state
all or a combination of the following statements, and nothing more: a) that ORR
Safety will continue to be an important distributor of the product but Ironclad
can sell KONG gloves through any other distribution channel; b) that both
Parties believe in the KONG brand; c) the KONG brand has significant value; d)
the Parties will move forward together to sell products; e) both Parties are
pleased with the terms of the settlement; and f) the remaining terms of this
Agreement are confidential and cannot be disclosed.

 

25.       Litigation Documents. The Parties agree that any documents produced in
the Litigation pursuant to the January 15, 2016 Agreed Protective Order (DN-25)
(the “Protective Order”) shall be handled pursuant to Section 15 of the
Protective Order.

26.       Execution by Counterpart. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.

27.       No Construction Against Drafter. No inference in favor of, or against,
any party to this Agreement will be drawn from the fact that such party has
drafted any portion of this Agreement.

Signature Page Follows

 

 

In witness whereof, the Parties have executed this Agreement on the date first
written above.

Ironclad Performance Wear Corporation 

By: /s/ Jeff Cordes

Name: Jeff Cordes

Title: President & CEO

ORR Safety Corporation 

By: /s/ Jeffrey S. Sweedler

Name: Jeffrey S. Sweedler

Title: President