exv10w5





Exhibit 10.5


SETTLEMENT AGREEMENT




     This Settlement Agreement (“Agreement”) is entered into and is effective as of December ___,
2009 by and between (1) Zrii, LLC, a Delaware limited liability company, and (2) William F. Farley,
an individual, on the one hand, and (3) Lifevantage Corporation, a Colorado corporation, (4)
Wellness Acquisition Group, a Delaware corporation, (5) Former Zrii Executives (as that term is
defined herein), and (6) Former Zrii Independent Executives (as that term is defined herein), on
the other hand (hereinafter, Zrii, LLC, William F. Farley, Lifevantage Corporation, Wellness
Acquisition Group, the Former Zrii Executives, and the Former Zrii Independent Executives are
sometimes referred to collectively as the “Parties,” and individually as a “Party.”)



Recitals




     WHEREAS, the Parties have been involved in various litigations against each other (as
described herein); and



     WHEREAS, the Parties desire to fully and finally resolve those litigations and their disputes
on the basis set forth herein,



     NOW, THEREFORE, the Parties hereby agree as follows:



Agreement





	1	 	Definitions. Unless expressly stated to the contrary herein, the following definitions of
terms shall apply to, and govern the interpretation and enforcement of this Agreement:






	 	1.1	 	The term “Zrii” shall mean and refer to Zrii, LLC, a Delaware limited liability
company, which is a multilevel marketing company with headquarters in Draper, Utah, and
its Affiliates.
	 
	 	1.2	 	The term “Farley” shall mean and refer to William F. Farley, an individual, who
is the managing member and principal owner of Zrii.
	 
	 	1.3	 	The term “Lifevantage” shall mean and refer to Lifevantage Corporation, a
Colorado corporation, which is a multilevel marketing company that sells dietary
supplements, with headquarters in San Diego County, California.
	 
	 	1.4	 	The term “WAG” shall mean and refer to Wellness Acquisition Group, a Delaware
limited liability company.
	 
	 	1.5	 	The term “Former Zrii Executives” shall mean and refer to those individuals
whose names appear on Exhibit “A”.




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	 	1.6	 	The term “Former Zrii IEs” shall mean and refer to those individuals and
entities whose names appear on Exhibit “B”, including their respective Affiliates and
any affiliated service entity.
	 
	 	1.7	 	The term “Former Zrii Employees” shall mean and refer to those individuals
whose names appear on Exhibit “C.” To the extent any individual falls within the
definition of “Former Zrii Executives” and “Former Zrii Employees,” such person shall
be deemed to be subject to the obligations of both groups.
	 
	 	1.8	 	The term “Defendants” shall mean and refer to Lifevantage, WAG, the Former Zrii
Executives, and the Former Zrii IEs.
	 
	 	1.9	 	The term “the Delaware Litigation” shall mean and refer to that certain
litigation pending in the Chancery Court of Delaware, Civil Action No. 4374-VCP.
	 
	 	1.10	 	The term “the California Litigation” shall mean and refer to that certain
litigation pending in the United States District Court for the Southern District of
California, Case No. 09-CV 0405 L RBB.
	 
	 	1.11	 	The term “the Utah Litigation” shall mean and refer to that certain litigation
pending in the Third District Court of Salt Lake County, Utah, Case No. 090903383.
	 
	 	1.12	 	The term “the Preliminary Injunction” shall mean and refer to that Preliminary
Injunction Order issued in the Delaware Litigation, along with the related Memorandum
Opinion.
	 
	 	1.13	 	The term “Claims” shall mean and refer to any claims, cross-claims,
counterclaims, causes of action, liabilities, demands, obligations, rights, damages,
costs, or expenses of any nature, kind, or character that have or could have been
brought, asserted, alleged, or proposed in any lawsuit, action, arbitration, or
proceeding of any kind, nature, or description, whether arising under or sounding in
common law, contract, tort, statute, regulation, or rule for any reason, with respect
to any dispute, controversy, or injury and for any amount or any form of relief.
	 
	 	1.14	 	The term “Former Zrii Executive Claims” shall mean and refer to any and all
Claims, asserted, unasserted, known or unknown, which the Former Zrii Executives have
or claim to have against Farley or Zrii.
	 
	 	1.15	 	The term “Former Zrii IE Claims” shall mean and refer to any and all Claims,
asserted, unasserted, known or unknown, which the Former Zrii IEs have or claim to have
against Farley or Zrii.
	 
	 	1.16	 	The term “Former Zrii Employee Claims” shall mean and refer to any and all
Claims, asserted or unasserted, known or unknown, which the Former Zrii Employees have
or claim to have against Farley or Zrii.




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	 	1.17	 	The term “the Administrative Proceedings” shall mean and refer to
administrative proceedings brought by some or all of the Former Zrii Executives or
Former Zrii Employees against Zrii and/or Farley.
	 
	 	1.18	 	The term “Zrii Confidential Information” shall mean and refer to any and all
“trade secret” information as that term is defined at U.C.A. § 13-24-2 (4) and related
case law.






	2	 	Consideration






	 	2.1	 	In consideration of the covenants and agreements of Zrii and Farley herein,
Lifevantage agrees to pay Zrii the total lump sum of Four Hundred Thousand and 00/100
Dollars ($400,000.00). Said payment shall be made on or before December 21, 2009, and
shall be made by wire transfer, with instructions for such wire transfer to be provided
by Zrii.
	 
	 	2.2	 	The consideration referenced in Section 2.1 will serve as consideration for the
dismissal and release of Zrii’s and Farley’s Claims against Lifevantage. This release
by Farley and Zrii of their claims shall be effective upon execution of this Agreement
by Lifevantage and Lifevantage’s payment as identified in 2.1.
	 
	 	2.3	 	Defendants acknowledge that they are aware of the Preliminary Injunction. Each
Defendant agrees that if his, her or its conduct violates the Preliminary Injunction,
Zrii may seek further remedies in the Delaware Litigation based on such conduct.
	 
	 	2.4	 	Lifevantage agrees that in any and all recruiting meetings that it conducts
between the effective date of this Agreement and the expiration of the Preliminary
Injunction, it will ensure that a Lifevantage representative affirmatively states that
Lifevantage will not accept applications at any time prior to the expiration of the
Preliminary Injunction from persons or entities who were Zrii Independent Executives or
their Affiliates prior to February 1, 2009. Lifevantage agrees to inform its
independent contractors that they must inform potential recruits at any and all
recruiting meetings that Lifevantage will not accept applications at any time prior to
the expiration of the Preliminary Injunction from persons or entities who were Zrii
Independent Executives or their Affiliates prior to February 1, 2009. Lifevantage
further agrees it will use its best efforts, in good faith, to not, until after the
expiration of the Preliminary Injunction, accept any applications from persons or
entities who were Zrii Independent Executives prior to February 1, 2009 or from their
Affiliates.






	3	 	Relinquishment of Claims to Ownership or Other Interests in Zrii






	 	3.1	 	Defendants each hereby expressly waive and renounce any option to acquire, or
right or claim of ownership of, membership in, or any other interest in Zrii or any of
its Affiliates of any nature, kind, or description (collectively, “Ownership
Interest”).
	 
	 	3.2	 	To the extent any of the Defendants had, have, or may ever have any Ownership
Interest in Zrii or any of its Affiliates, each of the Defendants hereby conveys such
past,




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	 	 	 	present, or future interest to Farley and fully and unconditionally relinquishes that
Ownership Interest to Farley.






	4	 	Destruction, Deletion and Non-Use of Zrii Confidential Information






	 	4.1	 	Defendants, individually and collectively, agree that they will destroy any and
all hard copies of Zrii Confidential Information, and will permanently destroy and
delete all such information from any computers or electronic media in their possession,
custody, or control. Defendants further agree that they will not make use of any Zrii
Confidential Information. The parties hereto agree and acknowledge that the retention
of a forensic copy of Curtis Call’s home computer hard drive by Kirby Zenger’s counsel,
John C. Rooker, is not and shall not be deemed to be a violation of this Paragraph 4.1
by any Party to this Agreement, provided that such Party does not have access to or use
any information from that hard drive.






	5	 	Disposition of the Delaware and California Litigations






	 	5.1	 	Not later than thirty (30) days after the receipt by Zrii of the $400,000.00
payment from Lifevantage and receipt of releases of Zrii and Farley from all Claims by
adverse Parties in the Delaware and California Actions, the Parties to those
litigations shall file and serve a stipulation or other necessary paper with the
objective of getting all Claims dismissed with prejudice. If the stipulation or other
paper in the Delaware Litigation is submitted prior to the expiration of the
Preliminary Injunction, it shall provide that the Preliminary Injunction shall remain
intact until the date of its expiration. Zrii agrees that it will not attempt to
extend the existing term of the Preliminary Injunction, providing no violations of the
Preliminary Injunction occur between the date of the payment described in 2.1 and the
expiration of that injunction on December 21, 2009.
	 
	 	5.2	 	The stipulation to dismiss the Delaware Litigation shall be in the form
attached hereto as Exhibit D. The stipulation to dismiss the California Litigation
shall be in the form attached hereto as Exhibit E.
	 
	 	5.3	 	Lifevantage agrees to acquire from (i) each Defendant in the California and
Delaware actions and (ii) each of the Former Zrii Executives and Former Zrii IEs an
executed copy of this Agreement on or before December 21, 2009.






	6	 	Disposition of the Utah Litigation and the Administrative Proceedings






	 	6.1	 	Lifevantage agrees to use its best efforts to acquire from each of the Former
Zrii Employees an executed Release and Dismissal document in the form attached hereto
as Exhibit F before December 21, 2009, and to execute, or have their counsel execute, a
stipulation to dismiss the Utah Litigation pursuant to the terms of Exhibit F, but not
later than December 31, 2009.
	 
	 	6.2	 	Lifevantage further agrees to use its best efforts to cause the Former Zrii
Employees to cause any administrative or other proceeding they may have initiated
against Zrii or




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	 	 	 	Farley regarding unpaid wages, bonuses, commissions or penalties to be dismissed or
withdrawn with prejudice, said dismissal and withdrawal to occur on or before
December 21, 2009, but not later than December 31, 2009. The dismissal shall be in
the form attached hereto as Exhibit G.






	 	6.3	 	If Lifevantage is unable to acquire all of the desired Release and Dismissal
documents before December 21, Lifevantage agrees to (A) provide to Zrii and Farley a
list of those persons from whom a Release and Dismissal document has not yet been
acquired by that date and (B) use its best efforts to acquire the remaining ones by
December 31, 2009.
	 
	 	6.4	 	Lifevantage agrees that it will notify each of the Former Zrii Employees that
he or she is not released from any claim of Zrii and Farley until that party executes
the Release and Dismissal document and submits the necessary papers to cause any
administrative claim filed by such Former Zrii Employees to be dismissed or withdrawn.
	 
	 	6.5	 	Zrii and Farley agree that within thirty (30) days after they receive the
Release and Dismissal documents, executed by the Former Zrii Employees, they will sign
the Release and Dismissal documents and file a stipulation or other documents necessary
to dismiss the Claims in the Utah Litigation with prejudice, as against those Former
Zrii Employees who have dismissed and released their Former Zrii Employee Claims
against Farley and Zrii.
	 
	 	6.6	 	The Former Zrii Executives and the Former IEs agree to cause any administrative
or other proceeding in which they have asserted Claims against Zrii or Farley regarding
unpaid wages, bonuses, commissions or penalties to be dismissed or withdrawn with
prejudice. They agree to execute all of the documents needed to accomplish those
dismissals or withdrawals before December 21, 2009.
	 
	 	6.7	 	The dismissals referenced in this Agreement shall be with prejudice and will
provide that each Party shall bear its respective attorneys’ fees and costs. All
dismissals shall further provide that the Parties to the Delaware and California
Litigations submit to the personal and subject matter jurisdiction of the court in
which the litigation or proceeding was commenced, and that despite the dismissal of the
litigation or proceeding, the affected court or administrative body shall retain
jurisdiction to enforce the provisions of this Agreement.






	7	 	Releases






	 	7.1	 	Subject to the limitations and qualifications set forth herein, Zrii and Farley
hereby fully and irrevocably release and forever discharge Defendants and their
respective agents, employees, officers, directors, heirs, and assigns (“Related
Persons”) of and from any and all Claims (including, but not limited to, those claims
asserted in the Delaware, Utah, and California Litigations or that otherwise could have
been brought or asserted in such litigations), whether known or unknown, existing or
potential, or




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	 	 	 	suspected or unsuspected, which Zrii and Farley had or asserted or could have
asserted, have or assert or could assert, or may hereafter have or assert against the
Defendants, that are based on conduct that occurred prior to the date of this
Agreement. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT NO RELEASE GRANTED HEREIN BY
ZRII and FARLEY IS EFFECTIVE UNLESS AND UNTIL THE PARTY ASSERTING THE RELEASE HAS
RELEASED ALL CLAIMS AGAINST ZRII AND FARLEY. IT IS THE INTENT OF THE PARTIES THAT
THIS RELEASE SHALL NOT OPERATE TO RELEASE ANYONE NOT A PARTY TO THIS AGREEMENT OR WHO
HAS NOT SIGNED THIS AGREEMENT.






	 	7.2	 	Subject to the limitations and qualifications set forth herein, each of the
Defendants hereby fully and irrevocably releases and forever discharges Zrii and Farley
and their respective agents, employees, officers, directors, heirs, and assigns
(“Related Parties”) of and from any and all Claims (including, but not limited to,
those claims asserted in the Delaware, Utah and California Litigations, the Former Zrii
Executive Claims, and the Former Zrii IE Claims and any claims that otherwise could
have been brought or asserted in the Delaware, Utah, and California Actions or any
administrative proceeding), whether known or unknown, existing or potential, or
suspected or unsuspected, which Defendants had or asserted or could have asserted, have
or assert or could assert, or may hereafter have or assert against Zrii or Farley, and
their agents, employees, officers, directors, heirs, and assigns that are based on
conduct that occurred prior to the date of this Agreement. IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT NO RELEASE GRANTED HEREIN BY A DEFENDANT IS EFFECTIVE UNLESS
AND UNTIL THE PARTY ASSERTING THE RELEASE HAS RELEASED ALL CLAIMS AGAINST THAT
DEFENDANT. IT IS THE INTENT OF THE PARTIES THAT THIS RELEASE SHALL NOT OPERATE TO
RELEASE ANYONE NOT A PARTY TO THIS AGREEMENT OR WHO HAS NOT SIGNED THIS AGREEMENT.
	 
	 	7.3	 	The Parties acknowledge and represent that they are familiar with the
provisions of Section 1542 of the California Civil Code, 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.




THE PARTIES FURTHER ACKNOWLEDGE THAT EACH OF THEM KNOWINGLY, VOLUNTARILY, AND
EXPRESSLY WAIVES ANY RIGHTS AND BENEFITS ARISING UNDER SECTION 1542 OF THE CALIFORNIA
CIVIL CODE AND/OR ANY OTHER STATUTE OR PRINCIPLE OF ANY OTHER STATE OF SIMILAR
EFFECT.



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	 	7.3.1.	 	Nothing contained in the foregoing releases shall be deemed to be a release of
claim by one party against another for a breach of this Agreement. If any party
believes another party has breached any covenant, obligation or promise that is
set out in this Agreement, it shall provide written notice to the party alleged
to not to be in compliance.
	 
	 	7.3.2.	 	The written notice shall specify each breach by (1) referring to the
provision(s) in this Agreement that is alleged to have been breached; and (2)
reciting, with a reasonable amount of detail, the facts that constitute such
alleged breach. The recipient of the notice shall have ten days to satisfy the
other that no breach occurred or that each breach has been resolved. If the
party which gave the notice remains unsatisfied, that party can then commence
whatever legal action it deems appropriate.






	 	7.4	 	Nothing in this Agreement shall release any former employee of Lifevantage from
any of the terms and conditions of his or her Lifevantage employment or severance
agreement.






	8	 	Warranties and Representations






	 	8.1	 	Each Defendant acknowledges, warrants, and represents that none of the claims
released herein has been transferred, assigned, or otherwise alienated prior to the
date of this Agreement.
	 
	 	8.2	 	Each Defendant acknowledges, warrants, and represents that the execution of
this Agreement and the covenants herein are within his/her/its authority and that this
Agreement is executed pursuant to necessary and customary authorizations.
	 
	 	8.3	 	Zrii acknowledges, warrants, and represents that it has not transferred,
assigned, or otherwise alienated any of the claims released by them herein.
	 
	 	8.4	 	Zrii acknowledges, warrants, and represents that the execution of this
Agreement and the covenants herein are within its authority and that this Agreement is
executed pursuant to necessary and customary authorizations.






	9	 	Non-Disparagement






	 	9.1	 	Each Party agrees not to make any disparaging statement to a third party about
another Party. “Disparaging statement” means any false, deceptive, or misleading
statement, as well as any statement intended to ridicule or demean a Party. This
obligation includes, but is not limited to, a Party’s character, reputation, products,
business operations, or employees.




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	10	 	Miscellaneous






	 	10.1	 	Understanding of Agreement Each of the Parties understands this
Agreement, and the terms and conditions contained herein, and has relied upon its own
judgment, belief, knowledge, understanding and expertise after careful consultation
with its own legal counsel concerning the legal effect of this Agreement and all of the
terms and conditions of this Agreement.
	 
	 	10.2	 	Final Integrated Agreement This Agreement, and any documents referred
to herein, constitute the entire, final and binding understanding between the parties
with respect to the subject matter hereof. No other statement or representation,
written or oral, express or implied, has been relied upon in executing this Agreement,
and all prior discussions, statements, and negotiations made or that have occurred
prior to the date of the Agreement are deemed merged into this Agreement, and shall not
be used for any purpose whatsoever.
	 
	 	10.3	 	Binding Effect This Agreement shall bind and inure to the benefit of
the Parties and to their respective successors and permitted assigns in interest. This
section shall be subject to the specific prohibitions on assignment set forth above.
	 
	 	10.4	 	Severability If any provision of the Agreement is held void or for any
reason unenforceable, the remaining portions of this Agreement will remain in full
force and effect.
	 
	 	10.5	 	Amendment This Agreement may not be amended, altered, modified, or
otherwise changed in any respect except by a writing duly executed by the Parties, or
their authorized representatives.
	 
	 	10.6	 	Joint Negotiation This Agreement has been negotiated and reviewed by
each of the Parties, and no provision of the Agreement shall be construed against any
Party on the ground that such Party was the drafter of that provision of the Agreement
or for any other reason.
	 
	 	10.7	 	Counterparts This Agreement may be executed by the Parties in
counterparts, each of which may be deemed an original and all of which together shall
constitute a single instrument
	 
	 	10.8	 	Governing Law This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah without regard to its choice of law and
conflicts of laws rules.
	 
	 	10.9	 	Additional Necessary Documents The Parties, and each of them, agree to
do all things necessary, including, but not limited to, execution of additional
documents, as may be reasonably required, in order to carry out the purposes and intent
of this Agreement and to fulfill their obligations under this Agreement.




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     Signature pages to follow.



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	 	ZRII, LCC, a Delaware a Limited Liability

company

 	 
	Signed:  December                     , 2009 	By:  	 	 
	 	 	William F. Farley 	 
	 	 	CEO and President 	 
	 
	 	 	 
	Signed:  December                      , 2009 	 	 
	 	William F. Farley 	 
	 	Individually 	 
	 
	Signed:  December                      , 2009 	LIFEVANTAGE CORPORATION, a Colorado corporation

 	 
	 	By:  	 	 
	 	 	David W. Brown 	 
	 	 	CEO and President 	 
	 
	 	WELLNESS ACQUISITION GROUP

 	 
	Signed:  December                      , 2009 	By:  	 	 
	 	 	Keith Fitzgerald 	 
	 	 	 	 
	 



	 	 	 	 	 
	Former Zrii Executives
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Signed: December                     , 2009

	 	 

Tracy Harward
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Signed: December                     , 2009

	 	 

Ryan Thompson
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Signed: December                     , 2009

	 	 

Gene Tipps
	 	 






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	Signed: December                     , 2009

	 	 

Kirby Zenger
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Signed: December                     , 2009

	 	 

Bart Graser
	 	 






Former Zrii IEs:




	 	 	 	 	 
	 	 	 
	Signed:  December                      , 2009 	
 	 
	 	Eric Albrechtsen 	 
	 	 	 
	 	 	 
	Signed:  December                      , 2009 	
 	 
	 	Tyler Daniels, Individually 	 
	 	 	 
	 



	 	 	 	 	 
	Signed:  December                     , 2009 	RETIREMENT OPTIONS, INC.

 	 
	 	By:  	 	 
	 	 	Tyler Daniels 	 
	 	 	Authorized Representative 	 
	 
	 	 	 
	Signed:  December                      , 2009 	
 	 
	 	Jason Domingo, Individually 	 
	 	 	 
	 
	Signed: December                     , 2009 	OVATION MARKETING GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Jason Domingo 	 
	 	 	Authorized Representative 	 
	 
	 	 	 
	Signed:  December                      , 2009 	
 	 
	 	Seth Mulder, Individually 	 
	 	 	 
	 
	Signed:  December                     , 2009 	GLOBAL LEGACY GROUP

 	 
	 	By:  	 	 
	 	 	Seth Mulder 	 
	 	 	Authorized Representative 	 



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	Signed:  December                     , 2009 	SETH MULDER ENTERPRISES

 	 
	 	By:  	 	 
	 	 	Seth Mulder 	 
	 	 	Authorized Representative 	 
	 
	 	 	 
	Signed:  December                      , 2009 	
 	 
	 	Marcell Niederhauser, Individually 	 
	 	 	 
	 
	Signed:  December                     , 2009 	CONVERGENCE MARKETING

 	 
	 	By:  	 	 
	 	 	Marcell Niederhauser 	 
	 	 	Authorized Representative 	 
	 
	 	 	 
	Signed:  December                       , 2009 	
 	 
	 	Mark Rogers, Individually 	 
	 	 	 
	 	 	 
	Signed:  December                       , 2009 	
 	 
	 	Marc Shinsato, Individually 	 
	 	 	 
	 
	Signed:  December                     , 2009 	SUNCREST ENTERPRISES

 	 
	 	By:  	 	 
	 	 	Marc Shinsato 	 
	 	 	Authorized Representative 	 
	 
	 
	Signed:  December                     , 2009 	GLOBAL LEGACY GROUP

 	 
	 	By:  	 	 
	 	 	Marc Shinsato 	 
	 	 	Authorized Representative 	 
	 
	 	 	 
	Signed:  December                          , 2009 	
 	 
	 	Colt Elam, Individually 	 
	 	 	 
	 	 	 
	Signed:  December                          , 2009 	
 	 
	 	Nathan B. Elam, Individually 	 
	 	 	 



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	Signed:  December                          , 2009 	
 	 
	 	Keith Fitzgerald, Individually 	 
	 	 	 
	 




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