Document:

DC2266.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

CASE NO.: 05-21251-ALTONAGA/BANDSTRA

MANUEL FIGUEROA, and DIXIE M. GARNER, individually and on behalf of those similarly situated,

	 	
Plaintiff,

	
vs.

SHARPER IMAGE CORPORATION a Delaware corporation, and ZENION INDUSTRIES, INC., a California corporation,

	 	
Defendants.

	
/

THIRD AMENDED SETTLEMENT AGREEMENT AND RELEASE

By And Among

Plaintiffs Manuel Figueroa and Dixie M. Garner, the Settlement Class, and Defendant Sharper Image Corporation

SF #1302754 v17

	
THIRD AMENDED SETTLEMENT AGREEMENT AND RELEASE
	
	
 
	
	
TABLE OF CONTENTS
	
	
 
	
	
1. 
		
 		
Definitions 
		
 		
3 
	
	
2. 
		
 		
The Class Action and Settlement Class Covered by This Third Amended Settlement 
		
 		
 
	
	
Agreement 
		
 		
13 
	
	
3. 
		
 		
Commitment To Support 
		
 		
13 
	
	
4. 
		
 		
Conditions of Settlement, Effect of Disapproval, Cancellation, or Termination 
		
 		
15 
	
	
5. 
		
 		
Procedure For Certification and Approving Settlement 
		
 		
17 
	
	
6. 
		
 		
Procedure For Final Approval 
		
 		
18 
	
	
7. 
		
 		
Notice To Class 
		
 		
21 
	
	
8. 
		
 		
Settlement Benefits 
		
 		
24 
	
	
9. 
		
 		
Cost of Notice and Additional Expenses 
		
 		
32 
	
	
10. 
		
 		
      Attorneys’ Fees, Class Representative Fees, and Litigation Costs and Expenses 
		
 		
32 
	
	
11. 
		
 		
      Opt-Out Rights 
		
 		
34 
	
	
12. 
		
 		
      Claims Procedure 
		
 		
35 
	
	
13. 
		
 		
      Claims Administration 
		
 		
35 
	
	
14. 
		
 		
      [INTENTIONALLY LEFT BLANK] 
		
 		
40 
	
	
15. 
		
 		
      Release 
		
 		
40 
	
	
16. 
		
 		
      Other Pending Actions 
		
 		
43 
	
	
17. 
		
 		
      Final Approval of This Agreement 
		
 		
44 
	
	
18. 
		
 		
      Final Judgment 
		
 		
44 
	
	
19. 
		
 		
      Effect of Failure of Court To Approve 
		
 		
45 
	
	
20. 
		
 		
      Successors & Assigns 
		
 		
46 
	
	
21. 
		
 		
      Entire Agreement 
		
 		
46 
	
	
22. 
		
 		
      Exhibits 
		
 		
47 
	
	
23. 
		
 		
      No Presumption Against Drafter 
		
 		
47 
	
	
24. 
		
 		
      Governing Law 
		
 		
47 
	
	
25. 
		
 		
      Continuing Jurisdiction and Exclusive Venue 
		
 		
48 
	
	
26. 
		
 		
      Authority 
		
 		
49 
	
	
27. 
		
 		
      Currency, Dates & Times 
		
 		
50 
	
	
28. 
		
 		
      Notices 
		
 		
50 
	
	
29. 
		
 		
      Preliminary Injunction and Stays of Other Actions 
		
 		
51 
	
	
30. 
		
 		
      Permanent Injunction as Part of Final Judgment 
		
 		
51 
	
	
31. 
		
 		
      Order of Dismissal With Prejudice of Other Pending Actions 
		
 		
52 
	
	
32. 
		
 		
      Stay 
		
 		
52 
	
	
33. 
		
 		
      Additional Terms 
		
 		
53 
	
	
34. 
		
 		
      Counterparts 
		
 		
54 
	

	
i

	
SF #1302754 v17

     THIS THIRD AMENDED SETTLEMENT AGREEMENT AND RELEASE (“Agreement,” “Settlement Agreement,” or “Third Amended Settlement Agreement”) will be unconditionally effective, by
and among defendant Sharper Image Corporation (“Sharper Image” or “Settling Defendant”) and plaintiff Manuel Figueroa and Dixie M. Garner (“Plaintiffs” or “Settlement Class Representatives”) (collectively, the
“Parties”) and the Settlement Class (as defined in § 2.2 ), when the Final Order and Final Judgment become Final as defined herein. This Third Amended Settlement Agreement supersedes the Second Amended Settlement Agreement and the
Amended Settlement Agreement only to the extent that it modifies or adds to those agreements, which, except to the extent superseded, are incorporated herein by this reference.

     WHEREAS, Sharper Image denies and has asserted a number of defenses to each and every one of the allegations in the above-captioned litigation (the “Class Action”) regarding the efficacy of
the Ionic Breeze® products. Sharper Image stands behind the Ionic Breeze® and contends that scientific testing has demonstrated the high quality, efficacy, and safety of the Ionic Breeze®, but, regardless of the merits of this Class
Action, the outcome of any litigation is always inherently uncertain; therefore, Sharper Image has concluded that it is in the best interest of Sharper Image, its shareholders, and its customers to settle this Class Action.

     WHEREAS, Plaintiffs equally believe in the allegations and assertions made in their Complaint and the merits of this Class Action, but also believe that settlement is in the best interest of the
Settlement Class Members; WHEREAS, Plaintiffs, Settlement Class, and Settling Defendant agree that this Third Amended Settlement Agreement, and any papers filed or prepared in connection with this Third Amended Settlement Agreement, shall not be
deemed or construed to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by Settling Defendant or of the truth of any of the claims or allegations made in this Class Action or otherwise;

1

     WHEREAS, arm’s length settlement negotiations have taken place between Plaintiffs (as defined in § 1.36), Settlement Class Counsel (as defined in § 1.49), Settling Defendant’s
Counsel (as defined in § 1.53), and the Settling Defendant (as defined in § 1.52); WHEREAS, as a product of those negotiations, this Third Amended Settlement Agreement, including its exhibits, which embodies all of the terms and conditions
of the settlement between the Settling Defendant and the Plaintiffs, both individually and on behalf of the Settlement Class, has been reached, subject to the final approval of the United States District Court for the Southern District of Florida
(the “Court”); WHEREAS, Settlement Class Counsel and the Plaintiffs have concluded, after due investigation and after carefully considering the relevant circumstances of the Settling Defendant, the Class Action, and the applicable law,
that it would be in the best interest of the Settlement Class to enter into this Third Amended Settlement Agreement in order to avoid the uncertainties of litigation and to assure that the benefits reflected herein are obtained for the Settlement
Class, and further, that Settlement Class Counsel and the Plaintiffs consider the settlement set forth herein to be fair, reasonable, adequate, and in the best interests of the Settlement Class; WHEREAS, the Settling Defendant, without admitting any
liability or wrongdoing, has concluded, despite its belief that it is not liable for the claims asserted and has good defenses thereto, that it will enter into this Third Amended Settlement Agreement solely to avoid the further expense,
inconvenience, and burden of this protracted and complex litigation, the risks inherent in uncertain complex litigation, and the distraction and diversion of its personnel and resources, and thereby put to rest this controversy; and NOW THEREFORE,
it is agreed by and among the undersigned, on behalf of the Settling Defendant, the Plaintiffs, and the Settlement Class, that this Class Action be conditionally settled, compromised, and dismissed in its entirety with prejudice, subject to the
approval of the Court, on the following terms and conditions:

2

	
1.      		
Definitions.	
	 
	 	
1.1      		
“Amended Settlement Agreement” means the agreement by and among	
	 
	 	
Defendant Sharper Image, Plaintiffs Manuel Figueroa, Dixie M. Garner, and the Settlement Class as defined in § 2.2 of the Amended Settlement Agreement executed on January 24, 2007.	
	 
	 	
1.2      		
“Agreement,” “Settlement Agreement,” or “Third Amended Settlement	
	 
	 	
Agreement” all mean this agreement by and among Defendant Sharper Image, Plaintiffs Manuel Figueroa and Dixie M. Garner, and the Settlement Class, as defined in § 2.2 of this Third Amended Settlement
Agreement.	
	 
	 	
1.3      		
“Claim Form” means the form used by Settlement Class Members, who do	
	 
	 	
not process their claim on the Claims Web Site, to manually make a claim under the Amended Settlement Agreement in substantially the form attached as Exhibit H hereto, and shall mean a form in substantially the same form as
attached as Exhibit I, subsequent to and if the Court enters an order amending the preliminary approval order to include the Second Amended Settlement Agreement or this Third Amended Settlement Agreement.	
	 
	 	
1.4      		
“Claims Administration” means the process by which this Third Amended	
	 
	 	
Settlement Agreement is administered pursuant to § 13.	
	 
	 	
1.5      		
“Claims Administrator” means the person or entity appointed by the Court	
	 
	 	
to administer this Third Amended Settlement Agreement pursuant to § 13.1.	
	 
	 	
1.6      		
“Claims Web Site” means the web site administered jointly by the Claims	
	 
	 	
Administrator and Settling Defendant located at “www.ibsettlement.com”.	
	 
	 	
1.7      		
“Class Action” means the above-captioned litigation.	
	 
	 	
1.8      		
“Class Notice” means the Court-approved forms of notice of the	
	 
	 	
conditional certification of the Settlement Class and notice of Fairness Hearing to the Putative Class Members, attached as Exhibits D, E, F, and G hereto.	
	 
	 	
1.9      		
“Closing Date” means the date so designated on Exhibit A that is attached	
	 
	 	
hereto and incorporated herein by reference, or such other date as may be set by the Court	
	 

3

for the doing or completion of the acts required to be completed by said date, as contemplated by this Agreement when using said defined term. If the Court sets a date or deadline for doing or completing such acts other than the
date designated on Exhibit A, then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.10 “Confirmatory Discovery” shall mean that discovery concluded by Settlement Class Counsel to perform their due diligence with respect to the fairness and appropriateness of the terms of
the Amended Settlement Agreement, the Second Amended Settlement Agreement and this Third Amended Settlement Agreement to the Putative Class Members and the Settlement Class Members in relation to the factual basis for the lawsuit; 1.11
“Court” means the United States District Court for the Southern District of Florida, Miami Division. 

     1.12 “Customer Number” means the Sharper Image customer number that will be used to assist Sharper Image in identifying Putative Class Members in the Ionic Breeze® Database.

     1.13 “Effective Date of Settlement” means the date so designated on Exhibit A that is attached hereto and incorporated herein by reference, or such other date as may be set by the Court for
the doing or completion of the acts required to be completed by said date, as contemplated by this Agreement when using said defined term. If, subsequent to the Execution Date of the Settlement Agreement, the Court sets a date or deadline for doing
or completing such acts other than the date designated on Exhibit A, then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.14 “Execution Date of the Settlement Agreement” or “Execution Date of the Third Amended Settlement Agreement” means the date upon which the last of all Parties 

4

and counsel listed as signatories on the Third Amended Settlement Agreement have executed it.

     1.15 “Fairness Hearing” means the hearing at which the Court will consider and finally decide whether to certify the Settlement Class, approve this Third Amended Settlement Agreement,
approve payment of fees and expenses, enter the Final Order and Final Judgment, and make such other final rulings as are contemplated by this Third Amended Settlement Agreement or are otherwise necessary to effectuate this settlement.

     1.16 “Fairness Hearing Date” means the date so designated on Exhibit A that is attached hereto and incorporated herein by reference, or such other date as may be set by the Court for the
doing or completion of the acts required to be completed by said date, as contemplated by this Third Amended Settlement Agreement when using said defined term. If the Court sets a date or deadline for doing or completing such acts other than the
date designated on Exhibit A, subsequent to the Execution Date of the Third Amended Settlement Agreement then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.17 “Final” means the time when the Final Order and Final Judgment represent a final and binding judgment with respect to the this Class Action, which shall take place upon the occurrence
of any of the following: (i) the date of final affirmance on an appeal (without any material modification or reversal of the Final Order and/or Final Judgment), or the date of affirmance by means of a writ or other proceeding (without any material
modification or reversal of the Final Order and/or Final Judgment), and the expiration of the time for a petition for or a denial of a writ of certiorari to review such orders, or, if certiorari is granted, the date of final affirmance (without any
material modification or reversal of the Final Order and/or Final Judgment) following review pursuant to that grant; or (ii) the date of final dismissal of any appeal from the final dismissal of any proceeding on certiorari to review the Final Order
and/or Final Judgment; or (iii) if no appeal is filed, the expiration date of the time for the filing or 5

noticing of any appeal or filing or initiating any other appellate proceeding challenging the Court’s Final Order and/or Final Judgment, i.e., expected to be thirty
(30) calendar days after entry of the Final Order and Final Judgment (or the expiration of any extension of time for the filing of any appeal or other appellate proceeding as may result from operation of law or order of the Court).

     1.18 “Final Claims Bar Date” means the date so designated on Exhibit A that is attached hereto and incorporated herein by reference, or such other date as may be set by the Court for the
doing or completion of the acts required to be completed by said date, as contemplated by this Third Amended Settlement Agreement when using said defined term. If, subsequent to the Execution Date of the Third Amended Settlement Agreement, the Court
sets a date or deadline for doing or completing such acts other than the date designated on Exhibit A, then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.19 “Final Judgment” means the final judgment and order of dismissal with prejudice, which certifies the Settlement Class, approves this Amended Settlement Agreement, approves payment of
attorneys’ fees and expenses, dismisses the Class Action with prejudice, enters a permanent injunction against other actions, and makes such other final rulings as are contemplated by this Third Amended Settlement Agreement, and which is
entered in conjunction with the Final Order. It is an express condition of this settlement that the Final Judgment be substantially in the form attached as Exhibit C, with such additional orders as may be determined by the Court as to only those
matters that this Third Amended Settlement Agreement leaves to the determination of the Court or as are necessary to effectuate this settlement.

     1.20 “Final Order” means the final Order by which the Court approves this Third Amended Settlement Agreement.

6

     1.21 “Hybrid” refers to the Sharper Image Hybrid Air Purifier, including the following model: SI724 Hybrid, and other models to be developed under the Hybrid name.

     1.22 “Ionic Breeze®” or “Ionic Breeze” means the Sharper Image branded Ionic Breeze® Silent Air Purifiers identified as the following models: SI737 –Professional
SeriesTM Ionic Breeze®Quadra®, SI830 – Professional SeriesTM Ionic Breeze GP®, SI397 – Ionic Breeze® 3.0, SI637 – Ionic Breeze® Quadra®, SI697 – Ionic Breeze® Quadra® Compact, SI730 –
Ionic Breeze GP®, SI720 – Ionic Breeze GP® Desktop, SI853 Professional SeriesTM Plus Midi, SI719 Professional SeriesTM Plus Tabletop, SI867 Professional SeriesTM Plus Quadra®, SI871 Professional SeriesTM Plus GP,
SI620 Compact Ionic Breeze®, SI624 Ionic Breeze® – 2.0, SI626 – Ionic Breeze® Night Light, SI589 – Ionic Breeze® cat litter box, SI633 – Ionic Breeze® car air purifier, SI717 – Ionic Breeze® small
spaces/bathrooms – plug-in, SI627 – Ionic Breeze® plug-in, SI628 – Ionic Breeze® plug-in, SI629 – Ionic Breeze® dashboard ionizer, SI861 –Ionic Breeze® GP Professional SeriesTM with OzoneGuard, SI837
– Ionic Breeze® Quadra® with OzoneGuard, SI857 – Ionic Breeze® Quadra® Professional SeriesTM with OzoneGuard, SI827 – Compact Ionic Breeze® Quadra® with OzoneGuard, S1710 - Ionic Breeze GP® for Car, and
S1736 - Ionic Breeze® Personal Air Purifier, and SI037 – Ionic Breeze® Quadra® Professional SeriesTM with OzoneGuard QVC.

     1.23 “Ionic Breeze® Database” means the database to be compiled by Settling Defendant, which includes information on Purchasers who Purchased an Ionic Breeze® directly from Sharper
Image, and includes information on Purchasers that Settling Defendant is able to obtain from Third-Party Resellers.

7

	
1.24      		
“Merchandise Credit(s)”	
	 
	 	
1.24.1 “Merchandise Credit(s)” means the credit given to Settlement	
	 

Class Members that are redeemable for any product sold at Sharper Image as provided in § 8.

1.24.2 Merchandise Credit(s) can only be redeemed from 

(1) Sharper Image retail stores in the United States; (2) Sharper Image’s online store at www.sharperimage.com; or (3) by phone or mail order directly
from Sharper Image.

     1.25 “Merchandise Credit Confirmation Number” means the number that may be used to track those Settlement Class Members who have qualified for a Merchandise Credit.

     1.26 “Notice” or “Notices” means the manner in which the Class Notice, Summary Notice of Settlement, and Notice of Final Approval are given and published as provided in §
7.

     1.27 “Notice Date” means the date so designated on Exhibit A that is attached hereto and incorporated herein by reference, or such other date as may be set by the Court for the doing or
completion of the acts required to be completed by said date, as contemplated by this Third Amended Settlement Agreement when using said defined term. If, subsequent to the Execution Date of the Settlement Agreement, the Court sets a date or
deadline for doing or completing such acts other than the date designated on Exhibit A, then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.28 “Notice of Final Approval” means the form of notice to be provided to Settlement Class Members that the Court has finally approved this Third Amended Settlement Agreement, in a form to
be submitted by the Parties and determined and approved by the Court following the Effective Date of Settlement.

8

     1.29 “Objection Date” means the date so designated on Exhibit A that is attached hereto and incorporated herein by reference, or such other date as may be set by the Court for the doing or
completion of the acts required to be completed by said date, as contemplated by the Amended Settlement Agreement and this Third Amended Settlement Agreement when using said defined term. If, subsequent to the Execution Date of the Settlement
Agreement, the Court sets a date or deadline for doing or completing such acts other than the date designated on Exhibit A, then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.30 “Opt-Out Deadline” means the date so designated on Exhibit A that is attached hereto and incorporated herein by reference, or such other date as may be set by the Court for the doing or
completion of the acts required to be completed by said date, as contemplated by this Third Amended Settlement Agreement when using said defined term. If, subsequent to the Execution Date of the Settlement Agreement, the Court sets a date or
deadline for doing or completing such acts other than the date designated on Exhibit A, then this defined term shall mean the date set by the Court rather than the date designated on Exhibit A.

     1.31 “Opt-Out Form(s)” means the written communication that must be provided by Putative Class Members to exclude themselves from the Settlement Class.

     1.32 “OzoneGuard” means the specially designed catalyst for Ionic Breeze® models that converts by-product ozone to oxygen.

     1.33 “OzoneGuard Qualifying Settlement Class Member” means a Settlement Class Member that purchased and retained at least one Ionic Breeze® floor model that did not include a built-in or
external OzoneGuard at the time of purchase.

     1.34 “OzoneGuard Qualifying Ionic Breeze® Product” means an Ionic Breeze® floor model air purifier product that did not include a built-in or external OzoneGuard at the time of
purchase, which include the following models: SI737 -Professional SeriesTM Ionic Breeze® Quadra®; SI830 - Professional SeriesTM Ionic 9

Breeze GP®; SI397 - Ionic Breeze® 3.0; SI637 - Ionic Breeze® Quadra®; SI730 - Ionic Breeze GP®; SI624 Ionic Breeze® – 2.0.

     1.35 “Person” and “Persons” mean all persons and entities (including but not limited to natural persons, individuals, corporations, agencies, bodies, governments, associations,
partnerships, trusts, and their predecessors, successors, administrators, heirs and assigns).

     1.36 “Plaintiffs” means Manuel Figueroa and Dixie M. Garner, Settlement Class Representatives.

     1.37 “Preliminary Settlement Approval” and “Preliminary Settlement Approval Order” both mean the Order and Amended Order that the Court entered as provided in 

	
5.1, attached hereto as Exhibit B.

1.38 “Preliminary Settlement Approval Hearing” means the January 23, 2007

hearing and subsequent actions by the Court whereby the Court first entertained the Parties’ request for preliminary approval of the Amended Settlement Agreement and conditional certification of a provisional Settlement
Class, as well as other actions requested by the Parties.

     1.39 “Preliminary Settlement Approval Hearing Date” means January 23, 2007 when the Court first entertained the Parties’ request for preliminary approval.

     1.40 “Product Identification Documentation” means the documentation with respect to claims that is required by § 13 and the Claim Form.

     1.41 “Proof of Purchase” means the documentation required by the Claim Form with respect to purchases not confirmed by the Ionic Breeze® Database. Proof of Purchase will constitute any
one or more of the following evidencing the purchase of an Ionic Breeze®: a copy of a receipt; a cancelled check; a bank copy or bank generated record of a negotiated check; a credit card bill or receipt.

     1.42 “Purchaser(s)” means any and all Persons who Purchased in or from a location in the United States of America an Ionic Breeze® from any source between 10

May 6, 1999, and January 24, 2007. The Settlement Class does not include any Person who sold and/or returned all of their Purchased Ionic Breeze(s)®, unless at least one unit was returned in exchange for another Ionic
Breeze®. The Settlement Class does not include Released Party, Zenion Industries, Inc., or those who timely and properly opted-out of the Amended Settlement Agreement and or this Third Amended Agreement.

     1.43 “Purchased” means paid monetary consideration for the Ionic Breeze®, subject to the qualifications in § 1.42.

     1.44 “Putative Class Member(s)” or “Putative Settlement Class Member(s)” means all Persons who are within the scope of the definition of “Settlement Class,” including
those who validly and timely request exclusion from the Settlement Class, as provided in this Third Amended Settlement Agreement and in the Amended Settlement Agreement.

     1.45 “Released Party/Parties” means those Persons released under § 15 and more particularly defined therein.

     1.46 “Released Rights” or “Released Claims” means any and all manner(s) of claims, demands, actions, suits, and causes of action released under § 15.

     1.47 “Settlement Class” is the FRCP 23 class covered by the Amended Settlement Agreement and this Third Amended Settlement Agreement and as defined in §

	
2.2      		
of this Third Amended Settlement Agreement.	
	 
	 	
1.48 “Settlement Class Counsel” means Lightfoot Franklin & White LLC, and	
	 

Haggard, Parks, Haggard & Lewis, P.A., and their respective attorneys.

     1.49 “Settlement Class Members” means all Purchasers who are within the scope of the definition of the “Settlement Class” and who do not validly and timely request exclusion from
the Settlement Class, as provided in the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement.

11

     1.50 “Settlement Class Representatives” means Manuel Figueroa and Dixie M. Garner and/or such other person(s) as the Court may appoint as representatives of the Settlement Class.

     1.51 “Settling Defendant” means Sharper Image Corporation, the Defendant in this Class Action.

     1.52 “Settling Defendant’s Counsel” means Thelen Reid Brown Raysman & Steiner LLP fka Thelen Reid & Priest LLP and its attorneys, and Lowndes, Drosdick, Doster, Kantor &
Reed, P.A. and its attorneys.

     1.53 “Settlement Packages” means the consideration afforded the Settlement Class Members under § 8 of this Third Amended Settlement Agreement.

     1.54 “Sharper Image” or “Sharper Image Corporation” means the Sharper Image Corporation, the defendant in this Class Action, which is also defined above as “Settling
Defendant.”

	
1.55      		
[ INTENTIONALLY LEFT BLANK]	
	 
	
1.56      		
“Summary Notice of Settlement” means the notice of the conditional	
	 

certification of the Settlement Class and notice of Fairness Hearing to the Putative Class Members, made pursuant to the Court’s orders, which are attached hereto as Exhibits F and G.

     1.57 “Third Amended Settlement Agreement,” “Settlement Agreement,” and “Agreement” all mean this agreement by and among Defendant Sharper Image, Plaintiffs Manuel
Figueroa and Dixie M. Garner, and the Settlement Class, as defined in § 2.2 of this Third Amended Settlement Agreement.

1.58 “Third-Party Resellers,” as determined to be such by the Claims 

Administrator in consultation with Settling Defendant, Settling Defendant’s counsel, and Settlement Class Counsel, means Person(s), in the business of selling products such as the Ionic Breeze®, and who purchased multiple
Ionic Breeze® products and resold them;

12

or Person(s) who purchased multiple Ionic Breeze® products with the intention of reselling them.

     1.59 “Timetable” or “Exhibit A” means the timetable contained in Exhibit A hereto, which shall govern the schedule of this Class Action unless it contradicts the terms herein, or
has been modified by the Court subsequent to the Execution Date of the Settlement Agreement.

     1.60 “Zenion” refers to Zenion Industries, Inc., former named defendant in this Class Action.

	
2.      		
The Class Action and Settlement Class Covered by This Third Amended Settlement Agreement	
	 
	 	
2.1      		
This Third Amended Settlement Agreement governs, within the scope of	
	 
	 	
its subject matter, the Settling Defendant, Settling Defendant’s Counsel, Settlement Class	
	 
	 	
Counsel, Putative Class Members, and those purporting to act on behalf of any Putative	
	 
	 	
Class Member.	
	 
	 	
2.2      		
The “Settlement Class” is defined and composed of any and all Persons	
	 
	 	
who Purchased in or from a location in the United States of America an Ionic Breeze®	
	 
	 	
from any source between May 6, 1999 and January 24, 2007. The Settlement Class does	
	 
	 	
not include any Person who sold and/or returned all of their Purchased Ionic Breeze(s)®,	
	 
	 	
unless at least one unit was returned in exchange for another Ionic Breeze®. The	
	 
	 	
Settlement Class does not include Settling Defendant, Zenion Industries, Inc., or those	
	 
	 	
who timely and properly opt-out of this Agreement.	
	 
	
3.      		
Commitment To Support.	
	 
	 	
3.1      		
Plaintiffs, the Settling Defendant, Settlement Class Counsel, and Settling	
	 
	 	
Defendant’s Counsel agree to recommend approval of and vigorously support this Third	
	 
	 	
Amended Settlement Agreement to the Court and to the Putative Class Members and to	
	 
	 	
undertake reasonable steps and efforts contemplated by this Third Amended Settlement	
	 
	 	
Agreement and any other reasonable steps and efforts that may be necessary or	
	 

13

appropriate, by order of the Court or otherwise, to carry out the terms of this Third Amended Settlement Agreement. The Parties to this Class Action shall aggressively cooperate, assist, and undertake all reasonable actions in
order to accomplish the above on a timely basis in accordance with Exhibit A hereto. Settlement Class Members, Plaintiffs, and Settlement Class Counsel expressly concur and agree that Settling Defendant is entitled to communicate with the Putative
Class Members, except as it relates to this Class Action (other than as provided in this Agreement). Settlement Class Members, Plaintiffs, Settlement Class Counsel, and Settling Defendant will not aid or encourage any objections to this Third
Amended Settlement Agreement (or any of its terms or provisions) nor to final certification of the Settlement Class, nor encourage any Putative Class Members to elect to opt out.

     3.2 Plaintiffs and Settlement Class Counsel shall make every reasonable effort to encourage Putative Class Members to participate and not to opt out. In addition, the Parties shall make all reasonable
efforts to enforce the jurisdictional and injunctive provisions of the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement, including assisting and joining in any motions or stipulations
that may be necessary to stay current or future-filed actions that may come within the scope of the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement.

     3.3 No material modifications to the Final Judgment, Exhibit C, shall be permitted unless approved expressly in writing by the Parties. If the Court materially modifies Exhibit C, such modifications
shall give either party the right to terminate this Third Amended Settlement Agreement and render this Class Action as if this Third Amended Settlement Agreement had never been executed. 

14

	
4.      		
Conditions of Settlement, Effect of Disapproval, Cancellation, or Termination 4.1 This Third Amended Settlement Agreement shall be conditioned on the occurrence of all of the following
events:	
	 

4.1.1 The Court has entered the Final Order;

     4.1.2 The Court has entered the Final Judgment, Exhibit C, without material modifications;

	
4.1.3      		
The Final Order and Final Judgment have become Final; and	
	 
	
4.1.4      		
Neither Settling Defendant nor Plaintiffs have elected to	
	 

terminate this Third Amended Settlement Agreement in accordance with the terms of this Third Amended Settlement Agreement. 

     4.2 If all of the conditions specified in § 4.1 are not met, then the Third Amended Settlement Agreement will be subject to termination in accordance with the terms of this Third Amended
Settlement Agreement.

     4.3 Settling Defendant reserves the right to terminate the Third Amended Settlement Agreement if the Final Judgment does not include the issuance of an injunction(s) that effectively enjoins the
prosecution of all pending litigation against Settling Defendant and those Persons listed in the release at § 15, or each of them, involving claims related to the Ionic Breeze®, including, but not limited to, any and all claims related in
any way to the efficacy of the Ionic Breeze® or any advertisements, representations, marketing, warranties, or the failure to disclose any potential health risk related to the Ionic Breeze® (health risks are to include but not be limited to,
any alleged health risks related to emissions or reactions such as ozone, terpenes and reactions with terpenes, or any other type of reaction related to the operation of the Ionic Breeze®, volatile organic compounds, ultrafine particles), causes
of action or claims for relief for alleged false advertising, breach of express and/or implied warranties, unjust enrichment, Magnuson-Moss Warranty Act, conspiracy, unfair competition, state consumer protection statutes, common law prohibiting
unfair or deceptive trade practices, breach of contract, 

15

fraud, and/or misrepresentation and equity prohibiting unjust enrichment or requiring restitution or disgorgement; and that are, were, or could have arisen out of or been related in any way to Settling Defendant’s advertising
or sale of the Ionic Breeze® and the disclosures relating thereto, which actions include but are not limited to, Potter and Rittenhouse v. Sharper Image, Cox
v. Sharper Image, Robertson v. Sharper Image (all currently pending in the Superior Court of California, in and for the County of San Francisco), and
Bryant v. Sharper Image (pending in the Circuit Court for the State of Florida, County of Duval), including the successful defeat of all challenges to any such injunctions. Settling
Defendant further reserves the right to terminate the Amended Settlement Agreement and this Third Amended Settlement Agreement if the Final Judgment does not include a permanent injunction in conformance with the above and does not include an order
requiring the dismissal with prejudice of the above actions.

     4.4 Plaintiffs reserve the right to terminate the Third Amended Settlement Agreement if, in the course of Confirmatory Discovery, Settlement Class Counsel obtained information that they did not
previously know or have reason to know, and such information relates directly to and would have materially and substantially improved Plaintiffs’ likelihood of prevailing in this Class Action if it had continued.

     4.5 The Settling Defendant and Plaintiffs do not agree to the conditional certification of the Settlement Class, the conditional appointment of Settlement Class Counsel, or the conditional appointment
of Settlement Class Representatives for any purpose other than to effectuate this Third Amended Settlement Agreement. If this Third Amended Settlement Agreement is terminated pursuant to its terms, or if the Effective Date of Settlement does not
occur for any reason, then the conditional certification of the Settlement Class and the appointment of the Settlement Class Representatives and Settlement Class Counsel shall be vacated, and the Class Action shall proceed as though the Settlement
Class had never been certified and neither prior agreements nor this Third Amended Settlement Agreement had been negotiated or entered into, the appointments 16

	 	
had not been made, and nothing done with regard to prior agreements or this Third Amended Settlement Agreement and any papers filed in support thereof shall be deemed an admission by Sharper Image, and in such event will also be
without prejudice to Plaintiffs’ right to file a motion to certify a class or classes and seek the appointment of settlement class representatives and settlement class counsel.	
	 
	
5.      		
Procedure For Certification and Approving Settlement. 5.1 Preliminary Settlement Approval.	
	 
	 	
The Court preliminary approved settlement on January 24, 2007. (A true and correct	
	 

copy of that Order and subsequent Orders related thereto are attached hereto as Exhibit B). 5.2 Forms and Notice Approval.

     Notice of the settlement, preliminary approval of the settlement, the fairness hearing, and other related matters was provided as follows: Written notice was provided in Sharper Image’s catalog,
which was sent for delivery in or about the last week of March 2007, to all Putative Settlement Class Members whose names appeared in the Ionic Breeze® Database who had not opted out of Sharper Image’s catalog program. Individualized mailed
notice was sent to the remaining Putative Settlement Class Members whose names and addresses were known to Sharper Image and who had opted out of Sharper Image’s catalog program, in addition to some Putative Class Members whose names were in
the Ionic Breeze® Database and had not opted out of the catalog program. Summary Notice appeared on page 18 of the April 8th edition of USA Weekend, a publication of USA Today that is inserted into various newspapers nationwide. Summary Notice also appeared in the April 16th edition of Sports Illustrated. The
following notices: Individualized catalog, individualized, and the Summary Notice of Settlement that appeared in USA Weekend and Sports Illustrated
are attached hereto as Exhibits D, E, F, and G, respectively.

5.3 Confirmatory Discovery.

     Settlement Class Counsel has been provided with discovery, reviewed documents provided by Settling Defendant, deposed representatives of Settling Defendant, engaged in 17

expert discovery, and retained experts. In addition, Settlement Class Representatives had 60 calendar days in which to conduct confirmatory discovery. Settling Defendant provided Settlement Class Counsel with confirmatory
discovery, including making corporate representatives available for depositions or interviews, and producing documents upon request on issues including, but not limited to, the following: (1) efficacy; (2) ozone emission; and (3) recordkeeping
relating to tracking of Purchasers. Settlement of this Class Action was contingent upon Settlement Class Representatives’ confirmation through this discovery of material factual representations made by Settling Defendant during settlement
negotiations and completion of Confirmatory Discovery, subject to § 4.4 of the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement. During review of discovery and Confirmatory
Discovery, Settlement Class Counsel did not discover any evidence that would trigger § 4.4 of the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this Third Amended Settlement Agreement.

	
6.      		
Procedure For Final Approval. 6.1 Overview.	
	 
	 	
The Amended Settlement Agreement was presented to the Court for Preliminary	
	 

Settlement Approval and was preliminarily approved. Subsequent to that, the Parties agreed to enhance the terms of the settlement to the benefit of Settlement Class Members in the Second Amended Settlement Agreement. Subsequent to
the execution of the Second Amended Settlement Agreement, the Parties agreed to enhance the terms of the settlement to the benefit of the Settlement Class Members even further in this Third Amended Settlement Agreement.

	
6.2      		
Opt-Outs.	
	 
	 	
6.2.1 As more particularly provided in § 11, Putative Class	
	 

Members shall be required to elect to opt out on or before the Opt-Out Deadline by placing a completed Opt-Out Form in the mail to the Claims Administrator.

     6.2.2 The Court entered an order requiring that the Opt-Out Form require that the Putative Class Member provide: (1) the Person’s name, address, 18

and telephone number; and (2) a statement or acknowledgment that the Person wishes to be excluded from the Settlement Class. Any Putative Class Member who does not timely and validly request exclusion from the Settlement Class in
the manner required by the Amended Settlement Agreement and Notices shall be bound by all the terms of the Second Amended Settlement Agreement and the Third Amended Settlement Agreement. 

     6.2.3 Since the Amended Settlement Agreement was executed, the Parties have added terms to the settlement as reflected in the Second Amended Settlement Agreement, and this Third Amended Settlement
Agreement. As described in § 7.2.2, those Putative Settlement Class Members who purported to opt-out of the settlement shall be provided additional notice giving them the opportunity to withdraw their election to opt out. If those Putative
Settlement Class Members who purported to opt-out of the settlement elect to withdraw their election to opt out, they will be considered Settlement Class Members.

	
6.3      		
Filing Objections Before The Fairness Hearing.	
	 
	 	
6.3.1 The Court entered an order (Exhibit B) requiring any	
	 

Settlement Class Member who wishes to be heard orally at the Fairness Hearing or who wishes for any objection to be considered to file a written notice of objection with the Court, including:

	
 
		
 		
6.3.1.1 
		
 		
A statement of each objection asserted; 
	
	
 
		
 		
6.3.1.2 
		
 		
A detailed description of the facts underlying each 
	
	
objection; 
		
 		
 
		
 		
 
	
	
 
		
 		
6.3.1.3 
		
 		
A detailed description of the legal authorities 
	

supporting each objection;

     6.3.1.4 A statement of whether the objector intends to appear and argue at the Fairness Hearing and, if so, how long the objector anticipates needing to present the objection; 19

     6.3.1.5 A list of witnesses whom the objector may call by live testimony, oral deposition testimony, or affidavit during the Fairness Hearing; 6.3.1.6 A list of the exhibits and documents that the
objector will offer during the Fairness Hearing, along with copies of such exhibits and documents;

     6.3.1.7 The name and contact information, if any, of counsel for the objector; and 6.3.1.8 A detailed statement of any personal or financial interest of the objector or his/her counsel in the outcome
of this Class Action, determination of the objection, Preliminary Settlement Approval, the Final Order, or Final Judgment.

     6.3.2 The Court entered an order (Exhibit B) requiring that all Settlement Class Member objectors file such notice of objection or request to be heard with the Clerk of the Court, and serve such
notice of objection or request to be heard upon Settlement Class Counsel and Settling Defendant’s Counsel, at the addresses set forth in § 28, no later than the Objection Date. The Court entered an order (Exhibit B) to the effect that:
objectors who fail to properly or timely file their objections with the Court or to serve them as provided above shall not be heard during the Fairness Hearing; nor shall their objections be considered by the Court; only Settlement Class Members may
object to the Settlement; and Persons who opt out of the Settlement Class may not object to the Settlement or intervene in this Class Action.

6.4 Setting the Fairness Hearing and Related Proceedings.

     A Fairness Hearing Date has been set by the Court for August 16, 2007. The Parties agree to urge approval so as to allow final approval by the Fairness Hearing Date. The Parties agree to work together
to identify and submit any evidence as may be required to satisfy the burden of proof for obtaining approval of this Third Amended Settlement Agreement. The stay 

20

of these proceedings shall not prevent the Confirmatory Discovery, filing of any motions, affidavits, and other matters necessary to the approval of this Third Amended Settlement Agreement. The Parties agree to move the Court to
enter an order to the effect that should any Person desire any discovery incident to (or which the Person contends is necessary to) the approval of Settlement in addition to the Confirmatory Discovery set forth herein, the Person must first obtain
an order from the Court that permits such discovery absent express written agreement by Settlement Class Counsel and the Settling Defendant’s Counsel.

	
7.      		
Notice To Class.	
	 
	 	
7.1 Preliminary Notice. Class Notice was provided as follows:	
	 
	 	
Following preliminary approval by the Court of the Amended Settlement Agreement and	
	 

conditional certification of the Settlement Class and approval of the forms and notices contemplated by § 5.2, Settling Defendant provided (with oversight by Settlement Class Counsel and Settling Defendant’s Counsel and
cost borne by Settling Defendant) individualized Class Notice to Putative Class Members who were identifiable by the Ionic Breeze® Database in the Sharper Image catalog that was sent to their homes in or about the last week of March 2007. Those
Putative Class Members who have chosen not to get the Sharper Image catalog, but who were contained within the Ionic Breeze® Database, were sent individualized Class Notice by mail. Purchasers of Models SI710 and SI736, included in the Ionic
Breeze® Database, were also sent individualized Class Notice by mail. Those Putative Class Members who were not found in the Ionic Breeze® Database were provided with Summary Notice of Settlement by publication in USA Weekend (April 8, 2007 edition) and Sports Illustrated (April 16, 2007 edition). All of the methods of notice were completed prior to the
deadline of May 3, 2007.

     7.1.1 At least (10) court days prior to the Fairness Hearing, Sharper Image shall submit to the Court a sworn Declaration that the mailing and publication of the Class Notices has occurred in
accordance with the provisions of 

21

the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement.

	
7.2      		
Final Notice & Notice of Additional Terms. 7.2.1 Final Notice.	
	 

     Ten (10) court days before the Fairness Hearing the Parties will submit an agreed (or if they cannot agree, their respective proposed) Notice of Final Approval. If the Court finally approves this
Third Amended Settlement Agreement, the Court shall approve and determine the form of the Notice of Final Approval. Ninety (90) days after the Effective Date of Settlement, Settlement Class Counsel and Settling Defendant’s Counsel shall cause
Settling Defendant to provide (with oversight by Settlement Class Counsel and Settling Defendant’s Counsel) Settlement Class Members with Notice of Final Approval as follows: (1) each Settlement Class Member who is in the Ionic Breeze®
Database will be sent by direct mail a copy of the Notice of Final Approval (at the time set forth in Exhibit A) confirming that the Court has approved the settlement as amended herein along with Merchandise Credit Confirmation Number(s), the total
amount of their credits, the expiration date of the Merchandise Credit(s), the number of free OzoneGuard(s) the Settlement Class Member is entitled to, how to utilize the Merchandise Credit(s), how to transfer Merchandise Credit(s), and how to
obtain their OzoneGuard(s); (2) those Settlement Class Members who, prior to the Effective Date of Settlement (only if the Effective Date of Settlement occurs on or prior to the Claims Bar Date), submitted Proof of Purchase either through
www.ibsettlement.com or by mail shall be sent by direct mail a copy of the Notice of Final Approval (at the time set forth in Exhibit A) confirming that the Court has
approved the settlement as amended herein along with Merchandise Credit Confirmation Number(s) informing them of the total amount of their credits based on the value and amount of Ionic Breeze® purchases reflected in their Proof of Purchase, the
expiration date of the Merchandise Credit(s), the number of free OzoneGuard(s) the Settlement Class Member is entitled to, how to utilize the Merchandise Credit(s), how to transfer Merchandise Credit(s), , and how to obtain their OzoneGuard(s); (3)
those Settlement Class Members who will submit Proof 22

of Purchase either through the www.ibsettlement.com or by mail on or after the Effective Date of Settlement (only if the Effective Date of Settlement
occurs on or prior to the Claims Bar Date) shall be sent by direct mail, within thirty (30) days after the Claims Bar Date, a copy of the Notice of Final Approval confirming that the Court has approved the settlement as amended herein along with
Merchandise Credit Confirmation Numbers informing them of the total amount of their credits based on the value and amount of Ionic Breeze® purchases reflected in their Proof of Purchase, the expiration date of the Merchandise Credit(s), the
number of free OzoneGuard(s) the Settlement Class Member is entitled to, how to utilize the Merchandise Credit(s), how to transfer Merchandise Credit(s), and how to obtain their OzoneGuard(s).

     The Notice of Final Approval will clearly and prominently state that the settlement terms have been enhanced and improved subsequent to the Notice of Preliminary Approval and will set forth the key
terms of the settlement, including those that have been enhanced and improved.

     The Notice of Final Approval will clearly and prominently state the OzoneGuard is an external attachment to certain Ionic Breeze® models. It acts as a catalyst to convert some ozone to
oxygen.

     The Notice of Final Approval will clearly and prominently state that the settlement does not release any past or future personal injury claims.

     The forms of the Notice of Final Approval to the Settlement Class shall be subject to Court approval, but the manner, timing, content, and substance of the Notice of Final Approval must be
substantially consistent with the terms of this Third Amended Settlement Agreement.

     Those Settlement Class Members who feel that they are entitled to a total credit greater than that which they were awarded or a greater amount of free OzoneGuard(s) shall comply with

§ 13.8 for Appeal of Disallowed Claims.

     A link to www.ibsettlement.com will be placed on www.sharperimage.com. The www.ibsettlement.com site will contain a link to the Notice of Final Approval, among the other settlement
documents linked to therein. The links related to the Notice of Final Approval on www.ibsettlement.com and the link on www.sharperimage.com to www.ibsettlement.com will 23

be placed in a fashion and in a prominent location mutually determined by the Parties and their counsel. These links will remain on both websites through the Final Claims Bar Date.

7.2.2 Notice To Opt-Outs of Right To Withdraw.

     Those Putative Settlement Class Members who purported to opt-out of the settlement by June 22, 2007, were given additional direct-mail notice of the additional terms in the Second Amended Settlement
Agreement on July 23, 2007, pursuant to the Court’s Order (DE 351), giving such persons until August 8, 2007 to withdraw their elections to opt-out. (Exhibit J.) If the Court permits incorporation of the Third Amended Settlement Agreement into
the preliminary approval order, a second notice will be sent to such persons no later than five (5) days after the Court enters such an order and such notice will be in the form attached hereto as Exhibit K. In this case, such persons shall be given
until August 13, 2007, or later date set by the Court, to communicate their withdrawal of their election to opt-out of the settlement. Those persons withdrawing their election may do so either through the Claims Web Site or by mail to the Claims
Administrator.

	
8.      		
Settlement Benefits.	
	 
	 	
8.1 Settlement Relief.	
	 
	 	
The relief provided to Settlement Class Members is multifaceted and includes	
	 

Merchandise Credit(s) for Settlement Class Members, sale of the OzoneGuard at the agreed upon price set forth below and for an agreed upon period of time set forth below, free OzoneGuard(s) to qualifying Settlement Class Members,
agreements regarding limitations on Sharper Image advertising for the Ionic Breeze® going forward, agreement on testing of some new Ionic Breeze® models going forward, and agreement on a cy pres fund under certain conditions, all solely to
the extent set forth more specifically as follows:

24

	
8.2      		
Merchandise Credit(s).	
	 
	 	
8.2.1 The Merchandise Credit is available to Settlement Class	
	 

Members as follows:

     8.2.2 The Merchandise Credit in the amount of $19.00 shall be made available on the following basis: (1) one Merchandise Credit awarded to each Settlement Class Member for each Ionic Breeze®
unit purchased by that Settlement Class Member at a price greater than $100.00 (excluding tax and shipping); and (2) only one Merchandise Credit awarded per Settlement Class Member for all Ionic Breeze® products purchased by that Settlement
Class Member at an individual price greater than $0.00 but less than or equal to $100.00 (excluding tax and shipping). Third-Party Resellers are limited to only one Merchandise Credit for all Ionic Breeze® purchases within the period
covered by this settlement.

     8.2.3 In order to qualify for the Merchandise Credit, the Settlement Class Member must: (1) be found in the Ionic Breeze® Database; or (2) provide Proof of Purchase as set forth herein.
Additionally, the Ionic Breeze® unit for which the Settlement Class Member is receiving a Merchandise Credit(s) cannot be the subject to a Merchandise Credit(s) attributed to another Settlement Class Member.

     8.2.4 The Merchandise Credit(s) shall be valid for two (2) years from the issuance of Notice of Final Approval.

     8.2.5 The Merchandise Credit(s) may not be redeemed for cash under any circumstances.

     8.2.6 Merchandise Credit(s) are subject to aggregation by Settlement Class Members in that multiple Merchandise Credit(s) may be combined on one purchase, but any balance shall not be redeemable in
cash and shall remain available as a credit against future purchases for the duration of the Merchandise Credit(s). The Merchandise Credit(s) shall be fully transferable by Settlement Class 25

Members or any Person who has been the recipient of transferred Merchandise Credit(s), but Merchandise Credit(s), which are obtained through a transfer, have an aggregation cap of five (5) credits in that no Person receiving
transferred Merchandise Credit(s) may use any more than five (5) transferred Merchandise Credit(s) regardless of whether such credits are used for one or multiple purchases. The aggregation cap applies only to Merchandise Credit(s) acquired through
a transfer – for example, a Settlement Class Member who acquires three (3) Merchandise Credit(s) through the claims process may still acquire an additional five (5) Merchandise Credit(s) as a transferee, and aggregate eight (8) Merchandise
Credit(s). Transfer of Merchandise Credit(s) will made either on the Claims Web Site or by mail through the use of the Transfer Form in substantially the same form as attached hereto as Exhibit K.

     8.2.7 The Merchandise Credit may be used as tender against the purchase of any products sold at Sharper Image stores, on www.sharperimage.com, or by order through the Sharper Image catalog.

	
8.3      		
OzoneGuard	
	 
	 	
8.3.1 A free external OzoneGuard attachment will be made	
	 

available to each OzoneGuard Qualifying Settlement Class Member as set forth below. 

     8.3.1.1 OzoneGuard Qualifying Settlement Class Members shall be entitled to one free external OzoneGuard attachment for every OzoneGuard Qualifying Ionic Breeze® Product that they purchased as a
Purchaser and did not return or re-sell to a third party.

     8.3.1.2 Settlement Class Members who are entitled to a free OzoneGuard(s), according to the Ionic Breeze® Database or according to their Proof of Purchase provided to the Settlement Claims
Administrator, shall be informed of their right to receive one as provided in § 7.2.1.

26

     8.3.1.3 Settling Defendant will make all reasonable efforts to provide OzoneGuard(s) to OzoneGuard Qualifying Settlement Class Members within 30 days of their request, and free OzoneGuard(s) shall be
made available by Settling Defendant in sufficient quantities and at sufficient locations to satisfy the reasonably anticipated demand from OzoneGuard Qualifying Settlement Class Members. 

     8.3.1.4 OzoneGuard Qualifying Settlement Class Members can pick up their external OzoneGuard at any Sharper Image store. If insufficient quantities are in stock, the Settlement Class Member may order
it through the normal process for taking customer orders for out of stock items, and Sharper Image will ship the units to the Settlement Class Member free of charge.

Alternatively, Settlement Class Members can order their OzoneGuard(s) at www.sharperimage.com, or by telephone, and in such case, Sharper Image will ship
the units to the Settlement Class Member free of charge.

     8.3.1.5 Free OzoneGuard(s)s will continue to be available to Qualifying Settlement Class Members in the fashion described above for two 

	
(2)      		
years from the issuance of Notice of Final Approval.	
	 
	 	
8.3.2      		
OzoneGuard available at cost to all consumers.	
	 
	 	 	
8.3.2.1 On a date no later than ten (10) court days after	
	 

distribution of Notice of Final Approval begins, with respect to the external OzoneGuard attachment for Ionic Breeze® floor models identified in § 1.34, the following is agreed to: 8.3.2.2 Due to divergent prices among
models of OzoneGuard(s), Sharper Image will sell external OzoneGuard attachments at the store for one median retail price ($7.00).

     8.3.2.3 This one median price would stay in effect for one (1) year from the issuance of Notice of Final Approval.

27

     8.3.2.4 The external OzoneGuard attachment may be purchased in the Sharper Image stores. If the store where the customer attempts to purchase the product does not have the attachment in stock, the
customer may order it through the normal process for taking customer orders for out of stock items, and such shipping shall be free of charge.

     8.3.2.5 Alternatively, customers can purchase the external OzoneGuard attachment, during the period described in section 8.3.2.3, on the Internet or by telephone as well; on any such purchase, Sharper
Image will ship the units to the customer free of charge.

     8.3.2.6 The median retail price will be available to all Sharper Image customers without the need for any claim form, claims administration, or submission of Product Identification
Information.

     8.3.2.7 Settling Defendant will make all reasonable efforts to provide OzoneGuard(s) to customers who seek to purchase them no less than thirty (30) calendar days after a request to purchase is made,
and OzoneGuard(s) shall be made available by Settling Defendant in sufficient quantities and at sufficient locations to satisfy the reasonably anticipated demand from customers. Persons who attempt to purchase more than ten (10) OzoneGuard(s) may be
required to establish that they are purchasing the OzoneGuard(s) for use with units that they currently own and that they are not purchasing such units with the intent to resell them at a profit, to be determined by the Claims Administrator, in
consultation with Settling Defendant’s counsel and Settlement Class Counsel.

8.3.2.8 In time to comply with the timetable under 

§§ 8.3.2.7 and 8.3.1.3, Sharper Image will design and tool an external OzoneGuard attachment for any Ionic Breeze® floor model not currently compatible with available external OzoneGuard attachments, and such
OzoneGuard(s) will be subject to the pricing structure outlined above. 

28

	
8.4      		
Modifications to Ionic Breeze® Advertisements & Independent Testing. 8.4.1 Without agreeing that it has made any of the following	
	 

representations, Sharper Image agrees to the following, with respect to advertisements for the Ionic Breeze®: 8.4.1.1 Sharper Image will eliminate all quantitative references to room size in its advertising claims with respect
to the Ionic Breeze® (e.g., 500 square feet, 7x7 feet) and will not make such references with respect to the Ionic Breeze® in the future absent reliable testing to support such
claims.

     8.4.1.2 Sharper Image will remove the British Allergy Foundation and the Asthma and Allergy Foundation of America seals from its advertising for the Ionic Breeze® and will not use these seals in
any future marketing for the Ionic Breeze®.

     8.4.1.3 Unless and until the Ionic Breeze® is registered as a medical device, Sharper Image will not state the Ionic Breeze® is a medical device. 

     8.4.1.4 Sharper Image shall not make any advertising claims that ozone produces health benefits in connection with the Ionic Breeze®.

     8.4.1.5 Sharper Image shall not make any advertising claims that the Ionic Breeze® removes harmful chemicals found in flooring, paint, and household cleaners.

     8.4.1.6 Sharper Image shall not make any advertising claims that the Ionic Breeze® causes the consumer to become immune to allergies.

     8.4.2 The above modifications do not apply to non-Ionic Breeze products such as the Hybrid or to any product developed, marketed, or sold whose name does not include the term Ionic Breeze®.
Settling Defendant cannot avoid the

29

obligations of § 8.4 by removing the term Ionic Breeze® from an Ionic Breeze® product.

     8.4.3 The above modifications are being done pursuant to this Agreement and Sharper Image consents to entry of an appropriate injunction should the Court determine that one is just and proper under
the circumstances.

     8.4.4 The above modifications shall be made and incorporated into Sharper Image’s advertising, commencing no later than 120 calendar days after the Effective Date of Settlement.

     8.4.5 The requirements of this Agreement, including the above modifications, do not apply to marketing or packaging materials already printed, prepared, or in circulation up to 120 calendar days after
the Effective Date of Settlement. This section is included so that Settling Defendant will not be forced to dispose of marketing or packaging materials already printed prior to the time new marketing and packaging materials are prepared and ready
for use under this Agreement. Settling Defendant agrees that it will only print marketing or packaging materials that it would use in the normal course of business and that it will not prepare additional marketing or packaging materials for the
purpose of delaying the effective implementation of § 8 of this Third Amended Settlement Agreement.

     8.4.6 The Plaintiffs and Settlement Class Counsel agree, on behalf of all Settlement Class Members, that these modifications adequately address the claims raised by the class and waive claims based on
the use of the disclosures or modified language, provided that Sharper Image uses and complies with the disclosures and that they accurately describe the attributes of the Ionic Breeze®. The Settlement does not preclude Sharper Image from making
changes to the language in its disclosures (a) that Sharper Image reasonably believes are necessary to comply with applicable law or to reflect a future change in its products; (b) that 30

are more detailed than or in addition to those required by this Agreement; or (c) reflect results from subsequent testing.

     8.4.7 If Class Counsel or the Class Representatives assert that Sharper Image violated any provision of the above corrective measures, Class Counsel or the Class Representatives shall notify Settling
Defendant’s Counsel, in writing, and Sharper Image shall have twenty (20) calendar days to cure or challenge the alleged violation and send a cure letter by the end of that period, unless, if such violation cannot be cured within the time
period, Sharper Image will communicate to Settlement Class Counsel by the conclusion of the twenty (20) calendar-day period mentioned above that circumstances necessitate an additional time to cure. In the event that Sharper Image opts to challenge
the alleged violation, both Plaintiffs and Settling Defendant agree, within ten court (10) days of the twenty (20) calendar-day period mentioned above, to submit briefs to the Court for final determination and ruling.

     8.4.8 For all Ionic Breeze® models to which the UL 867 test protocol applies, Sharper Image will test (through an independent testing laboratory) sample units of all current and future Ionic
Breeze® models for ozone emissions using the UL 867 test protocol and will not sell any Ionic Breeze® models, to which the UL 867 test protocol applies, that have not or do not pass the UL 867 standard. The testing is agreed to be done
pursuant to this Agreement and Sharper Image consents to entry of an appropriate injunction should the Court determine that one is just and proper under the circumstances.

     8.5 If, according to its final financial statements for the relevant periods, Sharper Image shows a positive net income after taxes, in the aggregate, over its last four (4) fiscal quarters prior to
the expiration of the two-year redemption period for the Merchandise Credit(s) (“Positive Net Income”), and the redemption rate over this two-year redemption period (“Actual Redemption Rate”) is less than twenty percent (20%) of
31

	 	
the total number of Merchandise Credit(s) available to Settlement Class Members (“Redemption Floor”), then cy pres relief is triggered, with payment being made
to a charity or charities selected by Settlement Class Counsel and approved by the Court (“Approved Charities”). In this event, Sharper Image shall pay ten percent (10%) of its Positive Net Income to Approved Charities, provided that the
amount paid by Sharper Image shall not exceed the Redemption Shortfall Value. The Redemption Shortfall Value is the percentage by which the Redemption Floor is in excess of the Actual Redemption Rate, multiplied by the Total Face Value of the
Merchandise Credit(s) (i.e., the number of Merchandise Credit(s) available to Settlement Class Members multiplied by $19).	
	 
	
9.      		
Cost of Notice and Additional Expenses.	
	 
	 	
Settling Defendant agrees to pay the cost of all Notice to the Putative Class Members and	
	 

Settlement Class Members that was required by the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement, or by Order of the Court. In addition, Settling Defendant agrees
to pay to Settlement Class Counsel all reasonable and customary out-of-pocket expenses incurred after the date of execution of the Amended Settlement Agreement, including costs associated with Preliminary Settlement Approval, the Final Order and
Final Judgment, and Confirmatory Discovery, such as court filing fees, copying charges, and reasonable travel expenses necessary for non-Florida Settlement Class Counsel to attend hearings before the Court in this Class Action and to perform
Confirmatory Discovery. The Parties agree that Settling Defendant’s payment of these costs and expenses provides additional value to the Settlement Class.

	
10.      		
Attorneys’ Fees, Class Representative Fees, and Litigation Costs and Expenses. 10.1 After the Parties had negotiated all principal terms and conditions of the Amended Settlement Agreement, the
Parties first entered into discussions regarding attorneys’ fees and expenses related to the settlement of this Class Action.	
	 

32

     10.2 Settling Defendant agrees to pay an amount not to exceed $1,875,000.00, plus the additional expenses outlined in § 9 above, subject to application for an award of attorneys’ fees
and expenses and Court approval, as full payment for all attorneys’ fees, costs, and expenses incurred in connection with this Class Action, notwithstanding the additional terms contained within this Third Amended Settlement
Agreement.

     10.3 Any applications for an award of attorneys’ fees and costs will be heard at the Fairness Hearing and such applications must be filed no later than the Objection Date. Settling Defendant
agrees not to object to any application for an award of attorneys’ fees and costs made by Settlement Class Counsel, provided that such application complies with this Agreement and is at or below the above amount.

     10.4 The above amount is in addition to and separate from all other consideration and remedies paid to and available to the Settlement Class, and payment of the above amount shall be in addition to
and shall not decrease or increase the Settlement Packages available to the Settlement Class Members.

     10.5 Attorneys’ fees shall be due and payable to Settlement Class Counsel ten (10) court days after the Effective Date of Settlement. If any portion of the attorneys’ fees is disallowed or
is deemed excessive in light of the amount of the class recovery, that amount shall be deducted from the sum due. Attorneys’ fees and costs shall not bear interest if paid in the manner and at the time provided herein.

     10.6 Settling Defendant agrees to pay an amount not to exceed $10,000 to each Settlement Class Representative, subject to an application for an incentive award and Court approval, as an incentive
award for their initiation of this lawsuit and diligent representation of the Settlement Class throughout these proceedings. Any application for an incentive award will be heard at the Fairness Hearing and such applications must be filed no later
than the Objection Date. Settling Defendant agrees not to object to any application for an incentive award made by Plaintiffs and/or Settlement Class Counsel, 

33

provided that such application complies with this Agreement and is at or below the above amount.

     10.7 Based on the above, Settlement Class Counsel intend to seek approval from the Court of attorneys’ fees and expenses in the amount of $1,875,000.00, plus an additional $10,000 in fees
to each of the Settlement Class Representatives.

	
11.      		
Opt-Out Rights.	
	 
	 	
11.1 Putative Class Members have the right to exclude themselves (“opt-out”) from the Amended Settlement Agreement, from the Second Amended Settlement Agreement, from this Third Amended Settlement Agreement, and from the
Settlement Class by timely submitting to the Clerk of the Court, by and through the Claims Administrator, a completed “Opt-Out Form” (in the form approved by the Court). Putative Class Members who so timely elect to opt-out shall be
excluded from settlement and from the Settlement Class. Such opt-out rights must be exercised by the “Opt-Out Deadline,” which has been established by the Court as the deadline for filing the Opt-Out Form. Within fifteen (14) calendar days
after the Opt-Out Deadline, the Claims Administrator will provide Settling Defendant’s Counsel and Settlement Class Counsel with a complete list of all timely and valid requests for exclusion, who will jointly submit the list to the Court
within five (5) court days thereafter. Five (5) court days after the deadline for Putative Settlement Class Members to communicate the withdrawal of their election to opt-out of the settlement, the Claims Administrator will provide Settling
Defendants’ Counsel and Settlement Class Counsel with a list of all timely and valid requests for such withdrawal, who will jointly submit the list to the Court within three (3) court days thereafter. Any Putative Class Member who does not
submit a properly completed Opt-Out Form by the Opt-Out Deadline and in the required form shall be a Settlement Class Member, or who withdraws his election to opt-out of the settlement, shall be bound by the terms of this Third Amended Settlement
Agreement and the Final Judgment thereon, provided that, in order to share in the Settlement Packages, such	
	 

34

Settlement Class Member must timely comply with claims procedures described herein and in the Amended Settlement Agreement.

     11.2 This Third Amended Settlement Agreement survives and applies even if there are Putative Class Members who opt-out, provided that the number of Purchasers who opt-out does not exceed 2% of the
Purchasers contained in the Ionic Breeze® Database. If the number of Putative Class Members who opt-out does exceed more than 2% of the Putative Class Members contained in the Ionic Breeze® Database, Settling Defendant shall have the right
to terminate this Agreement.

	
12.      		
Claims Procedure.	
	 
	 	
12.1      		
In order to be eligible to be considered under § 13.5 to receive the	
	 
	 	
Settlement Package available under § 8, a Settlement Class Member must (1) be identifiable as a Purchaser from the Ionic Breeze® Database; (2) submit a Claim Form on the Claims Web Site along with Proof of Purchase by the
Final Claims Bar Date; or (3) fill-out a Claim Form along with Proof of Purchase and mail it to the Claims Administrator postmarked on or before the Final Claims Bar Date. It is the intent of this agreement that there be no claim/registration
process for Settlement Class members identifiable as Purchasers in the Ionic Breeze® Database, as more fully set forth under § 7.2.1. Rather, such Settlement Class Members shall be able to use their Merchandise Credit(s) and receive their
OzoneGuard(s) simply by visiting a Sharper Image store, visiting the Sharper Image website, www.sharperimage.com, or by placing a telephone (catalog) order.	
	 
	 	
12.2      		
The Final Claims Bar Date will be December 31, 2008. (See Exhibit A.)	
	 
	 	
12.3      		
The details of how the Claims Web Site will be administrated have been	
	 
	 	
agreed between Settling Defendant’s Counsel and Settlement Class Counsel.	
	 
	
13.      		
Claims Administration	
	 
	 	
13.1      		
The Court appointed the joint venture of Rust Consulting, Inc. and	
	 
	 	
Complete Claim Solutions, LLC as the Claims Administrator. The Claims Administrator	
	 

35

shall be entitled to a reasonable fee and cost reimbursement approved by the Court. Settling Defendant will pay the cost, expenses, and fees of Claims Administration, in addition to other amounts payable hereunder. The Parties
agree that Settling Defendant’s payment of this cost has additional value to the Settlement Class. The Claims 

Administrator and Claims Administration shall be under the authority and continuing jurisdiction of the Court. The Claims Administrator shall be subject to removal by the Court for cause. If the Claims Administrator resigns, or is
removed, the Parties will recommend a replacement in accordance with the above procedures.

13.2 General Processing Guidelines.

     The Claims Administrator shall promptly process Claim Forms as submitted, approve or disapprove claims as received, process allowed claims and tender the appropriate Settlement Package to allowed
Settlement Class Members and shall otherwise carry out and comply with the provisions of the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement that require administrative management.
Within forty (40) calendar days after the Final Claims Bar Date, the Claims Administrator shall submit to the Court, Settling Defendant’s Counsel, and Settlement Class Counsel a written report detailing the allowed claims. Within forty (40)
calendar days after the Closing Date, Settling Defendant’s Counsel shall file a motion with the Court to close the Claims Administration and shall serve that motion on the Claims Administrator, Settlement Class Counsel, and any other persons
who filed a pleading with the Court in this case. When satisfied that the Class 

Administration should be closed, the Court will enter an order closing the same and discharging the Claims Administrator and Settlement Class Counsel.

13.3 Claims Administrator To Rely On Submitted Documents.

     In allowing claims, disallowing claims, and tendering the Settlement Packages to the allowed Settlement Class Members, the Claims Administrator shall rely solely on the Opt-Out Form, Claim Form, Proof
of Purchase, Customer Numbers, and Product Identification Documentation that is timely and properly submitted to the Claims Administrator by the 36

Settlement Class Members, as well as the information contained in the Ionic Breeze® Database. The Claims Administrator shall have no duty to investigate a particular claim beyond examination of such documentation. Except as
otherwise expressly provided herein, the Claims Administrator is not obligated to examine or consider documentation that is received beyond the respective deadlines established by the Court, but, as provided in § 13.4, may do so if the Claim
Form was timely received, in its discretion without setting a course of dealing, practice, or policy and without obligating the Claims Administrator or Settling Defendant to make the same or similar exceptions for other Settlement Class Members.
Notwithstanding the foregoing, Settling Defendant, Settlement Class Counsel, and the Claims Administrator shall take reasonable steps to prevent fraud in the Claims Administration process.

13.4 Deficiencies in Documentation.

     13.4.1 In the event that, during claims processing, the Claims Administrator finds technical deficiencies that exist in the Claim Form, Proof of Purchase, or Product Identification Documentation from
a Settlement Class Member, which the Claims Administrator, in its discretion, believes may be correctable, then the Claims Administrator shall notify the Settlement Class Member of the technical deficiencies, and shall allow the Settlement Class
Member thirty (30) calendar days from the date of receipt of such notice to correct the deficiencies. If the deficiencies are not corrected within the thirty (30) calendar-day period, the Claims Administrator shall reject the claim without prejudice
to the right of the Settlement Class Member to resubmit the Opt-Out Form or Claim Form or Proof of Purchase or Product Identification Documentation, provided the resubmission by the Settlement Class Member meets the deadlines and other requirements
set forth in the Amended Settlement Agreement, the Second Amended Settlement Agreement, this Third Amended Settlement Agreement, or established by the Court.

37

     13.4.2 “Technical deficiencies” as used in this subsection do not include material deficiencies or missing the Final Claims Bar Date, which absolutely bars allowance of a claim.

     13.5 Approval or Rejection of Claims. In order for a particular Settlement Class Member to become an allowed claimant, the Claims Administrator must be satisfied and certify that: 13.5.1 the claimant
did not opt-out pursuant to the applicable provisions of the Amended Settlement Agreement and Notices; and 13.5.2 the claimant: 13.5.2.1 is a bona fide Purchaser of the product from Sharper Image as reflected in the Ionic Breeze® Database and
the claimant electronically registered a claim on the Claims Web Site; or 13.5.2.2 submitted a properly completed, sworn, and executed Claim Form before the Final Claim Bar Date to the Claims Administrator (1) along with the claimant’s required
Proof of Purchase and such submittal documentation meets the criteria outlined in this Agreement for the particular claim being made; or (2) the claimant is a bona fide Purchaser of the product from Sharper Image as reflected in the Ionic
Breeze® Database; and 13.5.3 The Ionic Breeze® unit that is the subject of the claim is not the subject of a claim by any other Person. With respect to Ionic Breeze® products purchased at an individual price greater than $0.00 but
less than or equal to $100.00 (excluding tax and shipping), that only one Merchandise Credit is being awarded for all Ionic Breeze® products purchased by that Settlement Class Member at an individual price greater than $0.00 but less
than or equal to $100.00 (excluding tax and shipping).

     13.5.4 If, in the opinion of the Claims Administrator, a claim appears to be in violation of § 13.5.3, the Claims Administrator shall resolve the 38

dispute in consultation with Settlement Class Counsel and Settling Defendant’s Counsel, and shall award the Merchandise Credit to the appropriate Settlement Class Member(s) in accordance with this Third Amended Settlement
Agreement.

     13.6 The Claims Administrator shall report the results of processing all claims to the Court, Settlement Class Counsel, and Settling Defendant’s Counsel. The reports shall be filed quarterly,
with a final report, as of the Closing Date, due forty (40) calendar days after the Closing Date. The Claims Administrator shall make any adjustments to the results as ordered by the Court.

     13.7 Distribution of Settlement Benefits. The Claims Administrator shall promptly make arrangements to satisfy allowed claims as and when allowed after the Effective Date of Settlement. Settling
Defendant agrees to make the benefits available in a timely fashion so as to allow the Claims Administrator to promptly satisfy allowed claims as and when allowed. Notice of the issuance of the Merchandise Credit(s) for each allowed claim shall be
delivered by the Claims Administrator to each of the allowed claimants via the Claims Web Site where possible, or where necessary, at the address shown for the allowed claimant on his, her, or its Claim Form. For all allowed claimants to whom the
Claims Administrator was unsuccessful in attempting to deliver the benefits and as to whom the Claims Administrator recommends taking no further actions to deliver their benefits, the Court will enter an order that states, for each, either that the
Claims Administrator need not make any further effort to deliver the benefits or that directs further efforts to be taken by the Claims Administrator. The cost of such delivery and efforts to deliver shall be borne by the Settling Defendant. Any
Merchandise Credit(s) not disbursed prior to the Closing Date shall cease to exist. In no event shall the Settling Defendant or the Claims Administrator have any liability or obligation for claims beyond the agreed upon amounts.

     13.8 Appeal of Disallowed Claims. Any member of the Settlement Class shall have the right to appeal the determination of the Claims Administrator regarding said 39

claimant’s disallowed claim. Appeals shall be in writing and must be first submitted to the Person designated, from time to time, by the Claims Administrator to decide such appeals. The procedure for such appeals shall be
established by the Class Administrator and posted on the Claims Web Site. If the claimant remains unsatisfied, then appeal may be had to the Court. Any appeal to the Court shall be by motion filed no later than fifteen (15) calendar days after final
action by the Claims Administrator on such appeal and shall be determined after notice to the appealing claimant, the Claims Administrator, Settlement Class Counsel, and Settling Defendant’s counsel. Such appeals may not collaterally attack the
propriety of the Amended Settlement Agreement, and are limited to the sole issue of whether the Claims Administrator appropriately determined the validity and/or value of the claimant’s disallowed claim.

13.9 Limited Liability of Claims Administrator:

     The Claims Administrator and its owners, officers, directors, partners, shareholders, members, manager, employees, and agents do not owe a fiduciary duty to the Settlement Class Members, Plaintiffs,
or to the Settling Defendant. The Parties will ask the Court to grant the Claims Administrator limited immunity from liability to the effect that the Claims Administrator (and its owners, officers, directors, partners, shareholders, members,
manager, employees, and agents) shall be liable only for breach of contract, actual fraud, and negligence.

	
14.      		
[INTENTIONALLY LEFT BLANK]	
	 
	
15.      		
Release.	
	 
	 	
15.1 Released Persons. Released persons and entities shall include without limitation the following (the “Releasees,” “Released Persons,” “Sharper Image,” or “Settling Defendant”): Sharper
Image and Zenion Industries, Inc. and all of their respective current and former officers, directors, employees, agents, customers, resellers, retailers, wholesalers, distributors, attorneys, experts, assigns, insurers, employers, parents,
subsidiaries, affiliates, principals, partners, representatives, joint venturers,	
	 

40

beneficiaries, shareholders, independent contractors, consultants, predecessors, and successors.

     15.2 Released Rights. Upon the Effective Date of Settlement, the Plaintiffs and each of the Settlement Class Members, and their respective heirs, executors, administrators, representatives, agents,
attorneys, partners, spouses, successors, predecessors-in-interest, assigns, and any authorized users of their accounts, shall be deemed to have, and by operation of the Final Judgment shall have, fully, finally and forever released, relinquished
and discharged any and all rights, duties, obligations, claims (including those that the Plaintiffs or any Settlement Class Members do not know or suspect to exist in their favor at the time of the signing of the Amended Settlement Agreement which,
if known by them, might have affected their settlement with and release of the Released Parties, or might have affected their decision not to object to this Amended Settlement Agreement), actions, causes of action or liabilities, whether arising
under local, state, or federal law, whether by statute, contract, common law or equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, actual or contingent, liquidated or unliquidated, as of the
Effective Date of Settlement against the Released Parties: that arise out of or are related in any way or could have been asserted with respect to any or all of the acts, omissions, facts, matters, transactions, or occurrences that were directly or
indirectly alleged, asserted, described, set forth or referred to in this Class Action, including but not limited to, those actions presently pending in Florida and California State Courts described below, related to any Ionic Breeze®,
including, but not limited to, any and all claims related in any way to the efficacy of the Ionic Breeze® or any advertisements, representations, marketing, warranties, or the failure to disclose any potential health risk related to the Ionic
Breeze® (health risks are to include but not be limited to, any alleged health risks related to emissions or reactions such as ozone, terpenes and reactions with terpenes, or any other type of reaction related to the operation of the Ionic
Breeze®, volatile organic 41

compounds, ultrafine particles), causes of action or claims for relief for alleged false advertising, breach of express and/or implied warranties, unjust enrichment, Magnuson-Moss Warranty Act, conspiracy, unfair competition,
state consumer protection statutes, common law prohibiting unfair or deceptive trade practices, breach of contract, fraud, and/or misrepresentation and equity prohibiting unjust enrichment or requiring restitution or disgorgement; and (2) that are,
were, or could have arisen out of or been related in any way to Settling Defendant’s advertising, manufacture, design or sale of the Ionic Breeze® products and the disclosures relating thereto (all such released claims collectively the
“Released Claims” or “Released Rights”). This release will not apply to claims for breach of the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this Third Amended Settlement Agreement. THIS RELEASE DOES
NOT RELEASE OR WAIVE ANY CLAIM FOR PERSONAL INJURY AND THE RELEASED CLAIMS/RIGHTS DO NOT INCLUDE CLAIMS FOR PERSONAL INJURY.

     15.3 With respect to the releases set forth above, the Parties stipulate and agree that, upon the Effective Date of Settlement, the Plaintiffs shall expressly waive, and each of the Settlement Class
Members shall be deemed to have waived, and by operation of the Order shall have waived, the provisions, rights and benefits of California Civil Code Section 1542 (and all similar state, federal, and international laws), which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.

     Plaintiffs and each of the Settlement Class Members understand and acknowledge the significance of this waiver of California Civil Code Section 1542 and/or of any other applicable 42

law relating to limitations on releases. The Plaintiffs and/or Settlement Class Members or their counsel may hereafter discover facts in addition to or different from those which any of them now knows or believes to be true with
respect to the subject matter of the Released Claims, but the Plaintiffs shall expressly and each Settlement Class Member, upon the Effective Date of Settlement, shall be deemed to have, and by operation of the Final Judgment and Final Order shall
have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any
theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent
discovery or existence of such different or additional information. The Plaintiffs acknowledge, and the Settlement Class Members shall be deemed by operation of the Final Judgment and Final Order to have acknowledged, that the foregoing waiver was
separately bargained for and a key element of the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement of which this release is a part.

     15.4 Upon the Effective Date of Settlement, as defined in § 1.13, Settling Defendant shall be deemed to have, and by operation of the Final Judgment and Final Order shall have, fully, finally,
and forever released, relinquished and discharged Plaintiffs and Settlement Class Counsel from all claims arising out of, in any way relating to, or in connection with the initiation, prosecution, and settlement of this Class Action, except for
claims for breach of the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this Third Amended Settlement Agreement.

	
16.      		
Other Pending Actions.	
	 
	 	
The Settlement Class Members and Settling Defendant expressly retain the right, to the	
	 

extent permitted by law, the Amended Settlement Agreement, the Second Amended Settlement Agreement, this Third Amended Settlement Agreement, to plead the Amended Settlement 43

Agreement, the Second Amended Settlement Agreement, this Third Amended Settlement Agreement, as a full and complete defense to, or as the basis for a stay or an injunction against, any action, suit, or other proceeding to recover
any claim released by § 15, which may be instituted, prosecuted, or attempted in breach of the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this Third Amended Settlement Agreement.

	
17.      		
Final Approval of This Agreement.	
	 
	 	
This Third Amended Settlement Agreement shall become final upon the Effective Date	
	 

of Settlement which is the eleventh (11th) calendar day after the latest date for the occurrence of all of the following three events: (a) the Third Amended Settlement Agreement is executed and delivered by all Parties and
approved in all respects by the Court; (b) entry, as provided herein, of the Final Order and Final Judgment; and (c) the Final Order and Final Judgment become Final.

	
18.      		
Final Judgment	
	 
	 	
18.1      		
Subject to the Court’s approval, the Final Judgment shall be substantially	
	 
	 	
in the form attached hereto and incorporated herein by reference as Exhibit C.	
	 
	 	
18.2      		
The Settling Defendant desires that this settlement result in finality and	
	 
	 	
closure as to the issues involved in the Class Action.	
	 
	 	
18.3      		
The form of Final Judgment may include additional provisions as the	
	 
	 	
Court may direct which are not inconsistent with this Third Amended Settlement Agreement. In addition to the Final Judgment, the Court may issue such other orders, findings of fact, and conclusions of law as the Court may order,
so long as not inconsistent with this Amended Settlement Agreement. Without limiting the foregoing, it is anticipated that there may be additional orders, provisions in the Final Judgment, findings of fact and conclusions of law regarding:
objections; attorney fees; costs and expenses; fees to the Settlement Class Representative(s); and with respect to determinations by the Court on those matters that are to be determined by the Court by	
	 

44

	 	
the express terms of the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this the Third Amended Settlement Agreement.	
	 
	
19.      		
Effect of Failure of Court To Approve.	
	 
	 	
If the Court fails to approve this Third Amended Settlement Agreement or any part	
	 

hereof, or if such approval is modified in any way not permitted by this Third Amended Settlement Agreement, or set aside on appeal, or if the Court does not enter the Final Order and the Final Judgment, provided for in § 18,
or if the Court enters the Final Order and Final Judgment and review or modification is sought (whether by way of motion, appeal, writ, or other proceeding), and on such review, the Final Order or Final Judgment is not fully affirmed or is
materially modified, then this Third Amended Settlement Agreement may be rightfully cancelled and terminated at the option of either party, including as specifically provided for in this Agreement, and the Parties shall be restored to their original
positions, except as expressly provided herein. Termination, cancellation, and voiding of this Amended Settlement Agreement as provided in the foregoing shall not affect any agreement or obligation stated herein to survive termination. In the event
that the Third Amended Settlement Agreement shall be of no force or effect and, in any event, the Parties hereto agree that this Third Amended Settlement Agreement, including its exhibits, whether or not it shall become final, and any and all
negotiations, documents and discussions associated with it shall be without prejudice to the rights of any party, shall not be deemed or construed to be an admission or evidence of any violation of any statute or law of any liability or wrongdoing
by any Settling Defendant or of the truth of any of the claims or allegations contained in the First Amended Complaint or any other pleading; and evidence thereof shall not be discoverable or used directly or indirectly, in any way, whether in the
Class Action or in any other action or proceeding. However, any Settling Defendant or Settlement Class Member may introduce the Final Judgment, Amended Settlement Agreement, or this Third Amended Settlement Agreement, for the limited purpose of
establishing their rights and obligations under the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this the Third Amended Settlement Agreement, or that a particular claim is or is 45

not barred by the Final Judgment, Amended Settlement Agreement, the Second Amended Settlement Agreement, or this the Third Amended Settlement Agreement. The Parties expressly reserve all of their rights if the settlement does not
become Final in accordance with the term of this Third Amended Settlement Agreement.

	
20.      		
Successors & Assigns.	
	 
	 	
This Third Amended Settlement Agreement shall be binding upon, and inure to the	
	 

benefit of the successors and assigns of the Parties hereto. Without limiting the generality of the foregoing, each and every covenant and agreement herein made by the Settlement Class Counsel and the Plaintiffs on behalf of
themselves and on behalf of the Settlement Class, shall be binding upon all Settlement Class Members.

	
21.      		
Entire Agreement.	
	 
	 	
The Amended Settlement Agreement, as modified or superseded by the Second Amended	
	 

Settlement Agreement and this Third Amended Settlement Agreement contain an entire, complete, and integrated statement of each and every term and provision agreed to by and among the Parties; they are not subject to any condition
not provided for in them. The Amended Settlement Agreement, as modified or superseded by this Second Amended Settlement Agreement and this Third Amended Settlement Agreement, supersede any prior agreements or understandings between and among
Plaintiffs, Settlement Class Members, Settlement Class Counsel, Settling Defendant, and Settling Defendant’s Counsel regarding the subject matter of the Class Action, the Amended Settlement Agreement, the Second Amended Settlement Agreement,
and this Third Amended Settlement Agreement. This Third Amended Settlement Agreement shall not be modified in any respect except by a writing executed by all the Parties hereto or by order of the Court to the limited extent expressly provided for in
this Third Amended Settlement Agreement. In the event that, after such time as the Final Order is entered, it becomes clear that any deadline related to this settlement, including any deadline set forth herein or in the attached exhibits, is, or
becomes (such as by reason of appellate or other post-settlement proceedings), unmanageable, unreasonable, in conflict with any other deadline set 46

forth in this Agreement, and/or was not the deadline intended by the Parties, Settlement Class Counsel and Settling Defendant's Counsel shall designate a new deadline that comports with the provisions and intent of this Agreement.
Settlement Class Counsel and Settling Defendant’s Counsel shall notify the Court of any deadline changed pursuant to the this provision within ten (10) court days after Settlement Class Counsel and Settling Defendant's Counsel determine the new
deadline and at least three (3) Court days before passage of the deadline at issue. The Court may modify or deny the new deadline if it determines that modification or denial are necessary to uphold the integrity of the settlement.

	
22.      		
Exhibits.	
	 
	 	
All exhibits are incorporated into this Agreement by reference. Any inconsistency	
	 

between this Third Amended Settlement Agreement and the exhibits attached hereto shall be resolved in favor of this Third Amended Settlement Agreement.

	
23.      		
No Presumption Against Drafter.	
	 
	 	
None of the Parties hereto shall be considered to be the drafter of this Third Amended	
	 

Settlement Agreement or any provision hereof for the purpose of any statute, case law, or rule of interpretation or construction that would or might cause any provision to be construed against the drafter hereof. This Third
Amended Settlement Agreement was drafted with substantial input by all Parties, and no reliance was placed on any representations other than those contained herein.

	
24.      		
Governing Law.	
	 
	 	
This Third Amended Settlement Agreement shall be governed by and shall be construed	
	 

and enforced in accordance with federal law, where appropriate, and otherwise pursuant to the laws of the State of Florida, except for any conflict of law provisions in said laws of the State of Florida that may otherwise require
the application of the laws of a jurisdiction other than that of the State of Florida to the performance, validity, construction or enforcement of this Third Amended Settlement Agreement.

47

	
25.      		
Continuing Jurisdiction and Exclusive Venue.	
	 
	 	
25.1      		
The Settling Defendant and each Settlement Class Member hereby	
	 
	 	
irrevocably submits to the exclusive jurisdiction and venue of the United States District Court for the Southern District of Florida, Miami Division, for any suit, action, proceeding, case, controversy, or dispute relating to the
Amended Settlement Agreement and Exhibits thereto, the Second Amended Settlement Agreement and Exhibits thereto, and this Third Amended Settlement Agreement and Exhibits hereto, and negotiation, performance, or breach of those agreements. All
Settlement Class Members and the Settling Defendant are barred and enjoined from commencing or continuing any suit, action, proceeding, case, controversy, or dispute relating to the Amended Settlement Agreement and Exhibits thereto, the Second
Amended Settlement Agreement and Exhibits thereto, and this Third Amended Settlement Agreement and Exhibits hereto, and negotiation, performance, or breach of those agreements, in any state or federal court or other body other than the United States
District Court for the Southern District of Florida, Miami Division.	
	 
	 	
25.2      		
It is expressly agreed and stipulated that the United States District Court	
	 
	 	
for the Southern District of Florida, Miami Division, shall have exclusive jurisdiction and authority to consider, rule upon, and issue a final order and final judgment with respect to the subject matter of any of the following
actions, suits, or proceedings whether judicial, administrative or otherwise, which may be instituted by any Person, individually or derivatively, with respect to (a) the validity or enforceability of this Amended Settlement Agreement, (b) the
authority of Settling Defendant to enter into or perform the Amended Settlement Agreement in accordance with its terms, the Second Amended Settlement Agreement in accordance with its terms, the Third Amended Settlement Agreement in accordance with
its terms (c) the remedies afforded by those agreements, attorney fees, Settlement Class Representatives’ fees, costs, and expenses provided for in those agreements, injunctions against other actions; or (d) any other foreseen or
unforeseen	
	 

48

case or controversy in the United States related to or impacted by those agreements. This reservation of jurisdiction does not limit any other reservation of jurisdiction in those agreements nor do any other such reservations
limit the reservation in this sub-section.

     25.3 Further, the Parties agree that all cases and controversies against the Released Parties regarding the performance, efficacy and/or ozone emission of Ionic Breeze® models identified herein
should be heard only in this Court and that the Putative Class Members should be enjoined from bringing any such suits, except in this Court. The Parties agree that this Court shall expressly retain jurisdiction and will continue to retain
jurisdiction in this Class Action so that it can enforce the Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement, and the Final Judgment by, among other things, issuing injunctions in
the appropriate instances against later actions filed in violation of the terms of those agreements and this Court’s Orders.

     25.4 The Parties agree to ask the Court to include the substance of the foregoing provisions in its Final Order and Final Judgment. In the event of a case, controversy, or dispute arising out of the
negotiation of, approval of, performance of, or breach of the Amended Settlement Agreement, the Second Amended Settlement Agreement, or this Third Amended Settlement Agreement, the Court shall award attorneys fees and costs to the prevailing party.
Solely for purposes of such suit, action or proceeding, to the fullest extent that they may effectively do so under applicable law, the Parties hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim
or objection that they are not subject to the jurisdiction of such court, or that such Court is, in any way, an improper venue or an inconvenient forum.

	
26.      		
Authority	
	 
	 	
The undersigned counsel for the Parties to this Third Amended Settlement Agreement	
	 

covenant and represent that they are fully authorized to enter into and to execute this Third

49

Amended Settlement Agreement, provided that Settlement Class Counsel’s authority is subject to certification of a class and approval of this settlement by the Court.

	
27.      		
Currency, Dates & Times.	
	 
	 	
All values, fees, expenses, costs, and other amounts stated herein are to be determined,	
	 

are stated, and are to be paid in United States legal currency. All dates and times stated in this Third Amended Settlement Agreement mean the date and time in Miami, Florida.

	
28.      		
Notices.	
	 
	 	
All notices to Settlement Class Counsel, the Settling Defendant, and Settling Defendant’s	
	 

Counsel required under this Third Amended Settlement Agreement shall be sent by first class U.S. Mail, by hand delivery, or by facsimile, to the recipient designated in this Third Amended Settlement Agreement. Timeliness of all
submissions and notices shall be measured by the date of receipt (or some other method of calculating the date if otherwise provided for herein), unless the addressee refuses or delays receipt. The persons designated to receive notice are as
follows:

	
Jere F. White, Jr., Esq. 
		
 		
David L. Aronoff, Esq. 
	
	
Stephen J. Rowe, Esq. 
		
 		
Gayle I. Jenkins, Esq. 
	
	
Enrique J. Gimenez, Esq. 
		
 		
Thelen Reid Brown Raysman & Steiner LLP 
	
	
Lightfoot, Franklin & White, LLC 
		
 		
333 S. Hope Street, 29 th Floor 
	
	
400 20th Street North 
		
 		
Los Angeles, California 90071 
	
	
Birmingham, Alabama 35203 
		
 		
Telephone: 
		
 		
  (213) 576-8044 
	
	
Counsel for Settling Class Representative 
		
 		
Facsimile: 
		
 		
(213) 576-8080 
	
	
and Settling Class 
		
 		
Counsel for Settling Defendant 
	
	
Robert L. Parks, Esq. 
		
 		
Patrick M. Ryan, Esq. 
	
	
Haggard, Parks, Haggard & Lewis, P.A. 
		
 		
Thelen Reid Brown Raysman & Steiner LLP 
	
	
330 Alhambra Circle, 1st Floor 
		
 		
101 Second Street, Suite 1800 
	
	
Coral Gables, Florida 33134 
		
 		
San Francisco, CA 94105 
	
	
Counsel for Settling Class Representative 
		
 		
Telephone: 
		
 		
415.369-7356 
	
	
and Settling Class 
		
 		
Facsimile 415.369-8718 
	
	
 
		
 		
Counsel for Settling Defendant 
	
	
 
		
 		
Terry C. Young, Esq. 
	
	
 
		
 		
James S. Toscano, Esq. 
	
	
 
		
 		
Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 
	
	
 
		
 		
215 North Eola Drive 
	
	
 
		
 		
Post Office Box 2809 
	
	
 
		
 		
Orlando, Florida 32801 
	

50

	
Telephone: 407-843-4600

Facsimile: 407-843-4444

Counsel for Settling Defendant

	
29.      		
Preliminary Injunction and Stays of Other Actions	
	 
	 	
29.1      		
The Court entered a preliminary injunction and stay order as contained in	
	 
	 	
Exhibit B, as was provided for in the Amended Settlement Agreement. Exhibit B in its entirety, including the preliminary injunction and stay order contained therein, are expressly incorporated herein by this reference, and the
entry and continued enforceability and enforcement of that portion of Exhibit B that includes the preliminary injunction and stay order was material to the Amended Settlement Agreement and is a material term and basis of this Third Amended
Settlement Agreement.	
	 
	
30.      		
Permanent Injunction as Part of Final Judgment	
	 
	 	
30.1      		
This term of the Third Amended Settlement Agreement being a material,	
	 
	 	
negotiated term, Settling Defendant reserves the right to terminate the settlement, at its option, if the Final Order and Final Judgment do not include the issuance of a stay and injunction(s) in substantial conformity with the
following:	
	 

     30.1.1 All Released Claims, as described in the Third Amended Settlement Agreement, by or on behalf of any Settlement Class Member in any forum are hereby ordered permanently enjoined, except as may
be necessary in this Class Action only to implement the Third Amended Settlement Agreement or comply with the terms of the Third Amended Settlement Agreement. The actions, and prosecution of claims are hereby permanently stayed and enjoined, and the
actions and claims ordered to be dismissed with prejudice include, but are not limited to, the following actions and the claims prosecuted and asserted therein: (i) Robertson v. Sharper Image Corp., Superior Court of California, San Francisco County, Case No.: CGC 04-434230, (ii) Potter v. Sharper Image Corp., Superior Court of California, San Francisco County, Case No.:
CGC-0346350, (iii) Cox v. 

51

Sharper Image Corp., Superior Court of California, San Francisco County, Case No.: CGC-04-429331, and (iv) Bryant v. Sharper Image Corp.,
Florida Fourth Judicial Circuit Court, Duval County, Case No.: 16-2003-CA0006272XXX CV-C. Neither the Settlement Class Representatives nor any Settlement Class Member, either directly, representatively, or in any other capacity, nor any person or
entity allegedly acting on behalf of any Settlement Class Member, shall commence, continue, or prosecute against Sharper Image, or against any of the other Released Parties, any action or proceeding in any court, tribunal, or elsewhere, asserting
any of the Released Claims. This injunction has one exception: it shall not apply to individual claims of any Putative Class Member who timely excluded himself, herself, or itself from this
Class Action in a manner that complied with § 11 of the Preliminary Approval Order and § 11 of the Third Amended Settlement Agreement. This injunction is necessary to protect and effectuate the Amended Settlement Agreement, the Second
Amended Settlement Agreement, this Third Amended Settlement Agreement, the Final Order, and this Court’s flexibility and authority to effectuate this Third Amended Settlement Agreement and to preserve the Final Order, and is ordered in aid of
this Court’s jurisdiction and to protect its judgments pursuant to 28 U.S.C. sections 1651 (a) and 2283.

	
31.      		
Order of Dismissal With Prejudice of Other Pending Actions	
	 
	 	
The Final Judgment will include a provision ordering the dismissal with prejudice of all	
	 

other actions related to the Released Claims described in § 15.

	
32.      		
Stay	
	 
	 	
Unless and until the Amended Settlement Agreement, the Second Amended Settlement	
	 

Agreement, and this Third Amended Settlement Agreement are terminated pursuant to their provisions, the Parties agree that all discovery, motions, pleadings, and other activity in this Class Action affecting the Settling Defendant
shall be stayed except to the extent necessary to effectuate this settlement.

52

	
33.      		
Additional Terms.	
	 
	 	
33.1      		
Plaintiffs and Settlement Class Counsel shall not issue, or facilitate, or	
	 
	 	
cause to be issued, any press release or other public statements regarding the settlement except in accordance with a court-approved plan for dissemination of Class Notice and as necessary to obtain Preliminary Settlement
Approval. Except as may be necessary for Sharper Image to comply with legal, statutory, and/or regulatory requirements of disclosure of information, no statements regarding the settlement will be made prior to application for Preliminary Settlement
Approval whatsoever, beyond Settlement Class Counsel, Settling Defendant’s Counsel, Settling Defendant, and Plaintiffs. Inquiries may only be responded to by reference to information in the public record. This provision shall not prohibit
Settling Class Counsel from communicating with Settlement Class Members; provided, however, that Plaintiffs and Settlement Class Counsel must comply with all confidentiality agreements and protective orders in this Class Action. Any and all drafts
of this Third Amended Settlement Agreement and other related settlement documents shall remain confidential and shall not be disclosed or duplicated except as necessary to obtain approval of this settlement.	
	 
	 	
33.2      		
The Third Amended Settlement Agreement compromises claims that were	
	 
	 	
contested and shall not be deemed an admission by any Parties to this Class Action as to the merits of any claim or defense. Settling Defendant and Plaintiffs agree that the Settlement Package and the other terms of the Amended
Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement were negotiated in good faith by Settling Defendant and Plaintiffs, and reflect a settlement that was reached voluntarily after a mediation
process under the supervision of Lawrence M. Watson, Jr., Upchurch Watson White & Max Mediation Group, Inc., and consultation with competent legal counsel.	
	 
	 	
33.3      		
Neither the act of negotiating the Amended Settlement Agreement, the	
	 
	 	
Second Amended Settlement Agreement, this Third Amended Settlement Agreement,	
	 

53

including the agreement by Settling Defendant to stipulate to a nationwide settlement class, nor any act performed or document executed pursuant to or in furtherance of the Amended Settlement Agreement, the Second Amended
Settlement Agreement, or this Third Amended Settlement Agreement: (a) is or may be deemed to be or may be used as an admission of, or evidence of, the validity of any Released Claim, or of any wrongdoing or liability of the Settling Defendant; (b)
is or may be deemed to be or may be used as an admission of, or evidence of, any fault or omission of the Settling Defendant in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal; or (c) is or may
be deemed to be a waiver of Settling Defendant’s right to seek to enforce of its rights, including those provided for herein, in other cases or against persons or entities who opt out of the settlement. Settling Defendant may file the Amended
Settlement Agreement, the Second Amended Settlement Agreement, this Third Amended Settlement Agreement, and/or the Final Judgment in any action that has been or may be brought against them in order to support a defense or counterclaim based on
principles of res judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or
counterclaim.

     33.4 All agreements made and orders entered during the course of the litigation relating to the confidentiality of information shall survive the Amended Settlement Agreement, the Second Amended
Settlement Agreement, and this Third Amended Settlement Agreement.

     33.5 The Amended Settlement Agreement, the Second Amended Settlement Agreement, and this Third Amended Settlement Agreement supersede the settlement agreement dated January 16, 2007.

	
34.      		
Counterparts.	
	 
	 	
This Third Amended Settlement Agreement may be executed in counterparts, each of	
	 

which shall constitute an original. Facsimile or pdf signatures shall be considered valid 54

signatures as of the date hereof, although the original signature pages shall thereafter be appended to this Third Amended Settlement Agreement and kept in the custody of Settling Defendant’s Counsel.

EXECUTED on July 30, 2007. [INTENTIONALLY LEFT BLANK]

55

	
 
		
 		
LIGHTFOOT, FRANKLIN & WHITE LLC 
	
	
 
	
	
By:
	
	
Manuel Figueroa, Plaintiff 
		
 		
            Jere F. White, a partner 
	
	
 
		
 		
HAGGARD, PARKS, HAGGARD & LEWIS, P.A. 
	

	
By:

	
Dixie M. Garner, Plaintiff

	
Robert L. Parks, a partner

	
Sharper Image Corporation 
		
 		
THELEN REID BROWN RAYSMAN & STEINER 
	
	
LLP
	
	
 
	
	
 
	
	
By: 
		
 		
 
	
	
Print Name: 
		
 		
By: 
	
	
Its: 
		
 		
            David L. Aronoff, a partner.Exhibit 10.1

    
      

    

    Exhibit
      10.1

     

    LICENSE
      AGREEMENT

     

    THIS
      AGREEMENT
      (the
“Agreement”),
      effective this 31st
      day of
July,
      2007 (the “Effective
      Date”),
      between
      Health Discovery Corporation, a corporation of the State of Georgia, U.S.A.,
      with its principal place of business at 2 East Bryan Street, Suite # 601,
      Savannah, Georgia, hereinafter referred to as “HDC”,

     

    and

     

    CLARIENT,
      INC., a corporation of
      the
      State of
      Delaware, U.S.A., with its principal place of business at 31
      Columbia,
      Aliso Viejo, CA 92656,
      hereinafter referred to as “CLARIENT.”

     

    W
      I T N E
      S S E T H, That:

     

    WHEREAS,
      HDC has certain patent rights and technology covering genomic biomarkers related
      to prostate cancer; and

     

    WHEREAS,
      CLARIENT desires to obtain the right to use such patent rights and technology
      on
      the terms set forth hereinbelow.

     

    NOW,
      THEREFORE, in consideration of the promises and the mutual covenants herein
      contained, and other good and valuable consideration, the receipt and
      sufficiency of
      which
      are hereby
      acknowledged
      by the parties,
      and
      intending to be legally bound,
      the
      parties agree as follows:

     

    ARTICLE
      I.    DEFINITIONS

     

    As
      used
      in this Agreement the following terms, whether singular or plural, shall have
      the following meanings:

     

    A.    “Affiliate”
      shall mean any corporation
      or other entity
      that
      controls, is controlled by or is under common control with a party. A
      corporation or other entity shall be regarded as in control of another
      corporation or entity if it owns or directly controls more than fifty percent
      (50%) of the voting stock or other ownership interests
      of the
      other corporation or entity, or if it possesses
      the
      power to direct or cause the direction of the management and policies of the
      corporation or other entity or the power to elect or appoint more than fifty
      percent (50%) of the members of the governing body of the corporation or other
      entity.

     

    B.    “CLARIENT
      Net Proceeds” shall mean the reimbursement received by CLARIENT or Affiliates of
      CLARIENT from a third party customer pursuant to the sale, use or other transfer
      of a Licensed Product
      which
      generates a reported result (each, a “Test”). 

     

    C.    "Field
      of
      Use" shall mean diagnostic tests using gene biomarkers for differentiating
      clinically significant prostate cancer from other prostate conditions using
      biopsied prostate tissue. 

     

    D.    “HDC
      Net
      Proceeds” shall mean the gross receipts received by HDC or Affiliates of HDC
      from a third party licensee pursuant to a Test of a Licensed Product which
      generates a reported result, less the following actual and customary deductions:
      (i) cost of goods sold; (ii) cash, trade or quantity discounts; (iii) sales,
      use, tariff, import/export duties or other excise taxes imposed on particular
      sales; (iv) transportation charges or allowances; (v) or credits to customers
      because of rejections or returns.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    E.    "License"
      shall mean the license granted pursuant to Article II of this
      Agreement.

     

    F.    “Licensed
      Technology” shall mean, collectively, Licensed Know-How, Licensed Patents, and
      Licensed Products.

     

    G.    "Licensed
      Patents" shall mean the
      patents
      and
      pending
      patent
      applications in existence as of the Effective Date and listed in Attachment
      A,
      and any divisions, continuations and continuations-in-part or reissues
      or reexaminations of any patent or pending patent application identified herein
      (the “Existing
      Patents”),
      and
      any patents issuing from the Existing Patents and their
      foreign
      equivalents and
      any
      of the patent or patent applications to which any of the Existing Patents
      directly or indirectly claims priority, or forms a basis for priority, to the
      extent that such patents or patent applications not listed in Attachment A
      have
      claims that cover the Field of Use. 

     

    H.    “Licensed
      Product” shall mean a product, including
      Licensed Know-How, diagnostic kits, research reagents, proprietary compositions,
      substances, methods, documentation,
      services
      or a part thereof, the manufacture, use, sale, offer to sell, importation,
      distribution, or transfer of which 

     

    1.    is
      covered in whole or in part by one or more valid and unexpired claims of a
      granted Licensed Patent in the country in which the Licensed Product is made,
      used, imported, distributed or sold; or

     

    2.    is
      covered in whole or in part by any un-cancelled claim being prosecuted in a
      pending application for a Licensed Patent in the country in which the Licensed
      Product is made, used, distributed or sold.

     

    Licensed
      Product is covered by a valid and unexpired claim of a Licensed Patent if in
      the
      course of manufacture, use, importation, distribution or sale, it would, in
      the
      absence of this Agreement, infringe one or more claims of the Licensed Patent
      which is not cancelled and has not been held invalid by a court from which
      no
      appeal can be taken or has been taken in the time permitted for
      appeal.

     

    I.    “Licensed
      Know-How” shall mean the four (4) biomarkers identified in Attachment B and an
      algorithm developed by HDC that produces predictive results based upon measured
      gene expression for the four (4) biomarkers.

     

    J.    “Licensed
      Territory” shall mean worldwide.

     

    K.    "Effective
      Date" shall mean the date indicated above as the effective date of this
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II.    GRANT
      OF LICENSE

     

    A.    Grant
      of License.

     

    1.    As
      of the
      Effective Date of this Agreement, HDC hereby grants to CLARIENT an exclusive
      license, subject
      to Article II. A.3., with the right to grant sublicenses to Affiliates, and,
      upon prior approval by HDC, to third parties under the Licensed Technology
      to
      import, make, have made, use and sell any Licensed Product in the Field of
      Use
      within the Licensed
      Territory.
      For
      purposes of clarity, the above grant shall include the right for Clarient to
      incorporate the output and results from the Licensed Product into other tests
      or
      algorithms. 

     

    2.    Upon
      relevant
      approval
or
      clearance by
      the
      FDA of the diagnostic test for prostate cancer,
      the
      foregoing license shall become an exclusive license within the Field of Use
      in
      the Licensed Territory with respect to the commercial reference laboratory
      field
      and a nonexclusive license with respect to the academic and research
      fields.  

     

    3.    Notwithstanding
      anything herein to the contrary, in the event HDC elects to own and/or operate
      one or more laboratories (each, an “HDC Lab”), then such HDC Lab shall be able
      to utilize, or have a license under, the Licensed Technology to import, make,
      have made, use and sell Licensed Product, in the Licensed
      Territory.

     

    B.    Non-Assert
      Provision.  During
      the term of this Agreement and so long as CLARIENT is not in default with
      respect to any payment due to HDC hereunder,

     

    1.    HDC
      will
      not assert any Licensed Patent or
      Licensed Know-How to
      prevent CLARIENT
      or any
      Affiliate
      of CLARIENT
      from
      importing, using or selling any quantity of Licensed Product in the Field
      of
      Use within the Licensed Territory
      which is
      subject to CLARIENT
      Fees (as defined below);
      and

     

    2.    HDC
      will
      not assert any other patent or patent application now or hereafter controlled
      (in the sense of having the right to grant licenses or sublicenses) by HDC
      corresponding in subject matter to the Licensed Technology to prevent
CLARIENT
      or any
      Affiliate
      of CLARIENT
      from
      importing, using or selling any Licensed Product in the Field
      of
      Use within the Licensed Territory
      which is
      subject to CLARIENT
      Fees.

     

    C.    Right
      of First Refusal 

     

    If
      at any
      time HDC develops and desires to sell, transfer, assign, or license to one
      or
      more third parties, any additional biomarkers, HDC shall first offer such rights
      to CLARIENT by delivering a written notice to CLARIENT. CLARIENT shall have
      the
      right, within thirty (30) days following receipt of such written notice, to
      negotiate with HDC commercially reasonable terms to add such biomarkers to
      this
      Agreement. If the parties are unable to come to terms within said thirty
      (30)-day period, HDC shall have the right to offer such additional biomarkers
      to
      third parties. In the event a third-party expresses a willingness to accept
      HDC’s terms (license fee, royalty rate, minimum volume), HDC shall then notify
      CLARIENT of such terms and offer them to CLARIENT. CLARIENT shall then have
      fourteen (14) days to accept the terms in writing. Following delivery of such
      written acceptance to HDC, the additional biomarkers shall be deemed added
      to
      Attachment B hereto and included as part of the Licensed Products pursuant
      to
      such terms.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III.    WARRANTIES
      AND INDEMNITY

     

    A.    Limitations
      on Liability;
      Indemnity.

     

    While
      it
      is expected that information set forth in the Licensed Patents will enable
      CLARIENT to manufacture commercially acceptable Licensed Products
      on a
      commercial scale, HDC does not warrant or guarantee that such results will
      be
      obtained, and HDC shall not be liable to CLARIENT or any customer of CLARIENT
      because of any failure in the operations of CLARIENT or any customer. 
Moreover, while it is believed that the ordinary and anticipated use of
the
      Licensed
      Technology, or products made therefrom, will not result in safety or health
      hazards to workers or to purchasers of such products, HDC does not warrant
      or
      guarantee against health or safety hazards.  

     

    Consistent
      with the foregoing, each
      party shall indemnify,
      defend
      and hold
the
      other
      party harmless from any loss
      and
expenses
      (including reasonable attorneys’ fees, settlements and judgments) resulting from
      illness, injury or death to persons (including employees of HDC and CLARIENT)
      or
      loss or damage to property (including property of HDC and CLARIENT and its
      customers) or the environment incurred by HDC or a third party and resulting
      in
      any way whatever the cause may be arising out of or pertaining to the subject
      matter of this Agreement unless the same is proven
      to have
      been caused directly by
      bad
      faith, gross negligence or willful misconduct on the part of HDC or CLARIENT,
      as
      the case may be.

     

    Each
      party shall promptly notify the other party in writing of any suits, claims,
      actions, demands, complaints, lawsuits or other proceedings (each a “Claim”)
      that are brought by any third party which are subject to indemnification under
      this Agreement. The indemnifying party under this Agreement shall have the
      sole
      authority to settle any indemnified Claim without the consent of the other
      party, provided, however, that an indemnifying party shall not, without the
      written consent of the other party, as part of any settlement or compromise
      (i)
      admit to liability on the part of the other party; (ii) agree to an injunction
      against the other party; or (iii) settle any matter in a manner that separately
      apportions fault to the other party. As part of the settlement of any Claim,
      an
      indemnifying party shall obtain a full, complete and unconditional release
      from
      the claimant on utilizing attorneys of its choice, at its own
      expense.

     

    NEITHER
      PARTY SHALL IN ANY EVENT BE LIABLE FOR ANY LOSS OF PROFITS, OR FOR BUSINESS
      INTERRUPTION OR FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
      OUT
      OF OR IN CONNECTION WITH THIS AGREEMENT. NOTWITHSTANDING THE ABOVE, THIS
      PARAGRAPH SHALL NOT APPLY TO ANY LIABILITY FOR DAMAGES ARISING FROM (A) GROSS
      NEGLIGENCE OR WILLFUL MISCONDUCT; (B) BREACH OF THE OBLIGATIONS OF
      CONFIDENTIALITY UNDER ARTICLE IX OF THIS AGREEMENT; OR (C) LIABILITY FOR
      INDEMNIFICATION AGAINST THIRD-PARTY CLAIMS AS SET FORTH IN THIS ARTICLE
      III.A.

     

    B.    HDC
      Warranties.

     

    HDC
      represents and warrants that
      HDC
      has the exclusive right to license the Licensed Technology on the terms and
      conditions of this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    1.    To
      the
      best of HDC’s knowledge, Licensed Technology made, used, sold or otherwise
      disposed of pursuant to this License Agreement, is free from infringement of
      patents or any other intellectual property rights of others.  Should HDC
      receive notice of any third party claim of infringement, it shall immediately
      notify CLARIENT in writing.

     

    2.    HDC
      has
      full power and authority and has obtained all third party consents, approvals,
      assignments and/or other authorizations required to enter into this Agreement
      and to carry out its obligations hereunder.

     

    3.    Subject
      to the liens listed in ATTACHMENT C, the Licensed Patents are free and clear
      of
      all liens, claims, mortgages, security interests, or other encumbrances, and
      restrictions of others, HDC owns all right, title and interest to the Licensed
      Patents, including, without limitations, all right, title and interest to sue
      for infringement of the Licensed Patents.

     

    4.    Subject
      to Article VIII.A., HDC shall undertake all actions necessary for prosecution
      and maintenance of the Licensed Patents, including, but not limited to, payment
      of maintenance, annuity and renewal fees as required by the respective national
      patent offices that issued the patents, and payment of all attorney fees and
      costs for prosecution, maintenance, and grant of any pending patent
      applications.  

     

    5.    HDC
      has
      obtained and properly recorded previously executed assignments for the Licensed
      Patents as necessary to fully perfect its rights and title therein in accordance
      with governing law and regulations in each respective jurisdiction.

     

    6.    There
      are
      no existing contracts, agreements, commitments, proposals, offers, or rights
      with, to, or in any person to acquire any of the rights under the Licensed
      Technology which would prevent, alter or hinder the performance of the
      obligations hereunder.

     

    7.    Subject
      to Article II.A. hereof, no licenses or other rights under the Licensed
      Technology have been granted or retained by HDC, or any third party, including
      but not limited to any prior owners, or inventors as to the Field of
      Use.

     

    8.    Subject
      to Article II.A. hereof, CLARIENT will not be subject to any covenant not to
      sue
      or similar restrictions in its enforcement or enjoyment of the Licensed
      Technology.

     

    9.    None
      of
      the Licensed Patents has ever been found invalid, unpatentable, or unenforceable
      for any reason in any administrative, arbitration, judicial or other proceeding,
      and HDC does not know of and has not received any notice or information of
      any
      kind from any source suggesting that the Licensed Patents may be invalid,
      unpatentable, or unenforceable.

     

    10.    To
      the
      extent “small entity” fees were paid to the United States Patent and Trademark
      Office with respect to any Licensed Patent, such reduced fees were then
      appropriate because the payor qualified to pay “small entity” fees and
      specifically had not licensed rights in the Licensed Patent to an entity that
      was not a “small entity.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.    To
      the
      best of its knowledge, neither HDC nor its agents or representatives have
      engaged in any conduct, or omitted to perform any necessary act, the result
      of
      which would invalidate any of the Licensed Technology or hinder their
      enforcement, including, without limitation, misrepresenting HDC’s patent rights
      to a standard-setting organization.

     

    12.    None
      of
      the Licensed Patents has been or is currently involved in any reexamination,
      reissue, interference proceeding, or any similar proceeding, and no such
      proceedings are pending or threatened.

     

    13.    There
      are
      no actions, claims or proceedings threatened, pending, or in progress related
      to
      the Licensed Technology.

     

    14.    Subject
      to the liens listed in ATTACHMENT C, the Licensed Technology is free and clear
      of all liens, claims, mortgages, security interests, or other encumbrances,
      and
      restrictions of others.

     

    15.    Subject
      to notices listed in Attachment D, HDC has not put a third party on notice
      of
      actual or potential infringement of any of the Licensed Patents.  HDC has
      not initiated any enforcement action with respect to any of the Licensed
      Patents.

     

    16.    HDC
      had
      not and will not collaborate with any third-party in an attempt to invalidate
      CLARIENT’s intellectual property rights or construct any non-infringement
      defense

     

    C.    CLARIENT
      Warranties.

     

    CLARIENT
      represents and warrants:

     

    1.    CLARIENT
      will not collaborate with any third party in an attempt to invalidate Licensed
      Patents or construct any non-infringement defense.

     

    2.    To
      the
      extent CLARIENT is permitted , CLARIENT will notify HDC prior to or upon the
      sale, transfer or other disposition of all or substantially all of the assets
      of
      CLARIENT, or upon the acquisition of the outstanding capital stock of CLARIENT,
      such that any one shareholder owns in excess of 90% of the outstanding economic
      or voting interest of CLARIENT’s outstanding capital stock.

     

    ARTICLE
      IV.    PAYMENTS
      AND REPORTS

     

    A.    Fees
      Payable.

     

    1.    CLARIENT
      shall
      pay
      to HDC, in
      accordance with the payment terms set forth in Section IV.B below,
      thirty
      percent (30%) of the
      CLARIENT Net Proceeds received by CLARIENT or an Affiliate of CLARIENT with
      respect to all Tests of Licensed Products during the term of this Agreement
      (the
“CLARIENT
      Fees”). 
      

     

    2.    HDC
      shall
      pay to CLARIENT, in accordance with the payment terms set forth in Section
      IV.B
      below, fifteen percent (15%) of HDC Net Proceeds received by HDC or an Affiliate
      of HDC with respect to all Tests of Licensed Products during the term of this
      Agreement (the “HDC
      Fees”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B.    Reports
      and Remittances.

     

    1.    During
      the term of this Agreement,
      CLARIENT shall report in writing to HDC within thirty (30) days after the end
      of
      each calendar quarter the quantities of each Licensed Product subject to
the
      CLARIENT Fees
      hereunder that were used or sold by CLARIENT (or
      an
      Affiliate of CLARIENT) during
      said quarter and the calculation of the CLARIENT
      Fees thereon (each, a “CLARIENT
      Report”). 
      No later than thirty (30) days following the date of each such CLARIENT
      Report,
      CLARIENT
      shall pay to HDC the total amount of the CLARIENT
      Fees indicated in such CLARIENT Report. 
      If no Licensed Product subject to fee hereunder has been used or sold by
      CLARIENT during any such period, CLARIENT shall so report in writing to HDC
      within thirty (30) days after the end of such period.  Reports, notices and
      other communications to HDC hereunder shall be sent to:

     

    Dr.
      Stephen D. Barnhill

    Chairman
      & CEO

    Health
      Discovery Corporation

    2
      East
      Bryan Street, Suite # 601

    Savannah,
      GA 31401

    

    Payments
      by CLARIENT to HDC shall be made
      by
      wire
      transfer of immediately available funds to:
      _____________________________________.

     

    During
      the term of this Agreement, HDC shall report in writing to CLARIENT within
      thirty (30) days after the end of each calendar quarter the quantities of each
      Licensed Product subject to the HDC Fees hereunder that were used or sold by
      HDC
      (or an Affiliate of HDC) or any third party who effects a Test of a Licensed
      Product under a license from HDC during said quarter and the calculation of
      the
      HDC Fees thereon (each, a “HDC
      Report”). 
      No later than thirty (30) days following the date of each such HDC Report,
      HDC
      shall pay to CLARIENT the total amount of the HDC Fees indicated in such HDC
      Report.  If no Licensed Product subject to fee hereunder has been used or
      sold by HDC during any such period, HDC shall so report in writing to CLARIENT
      within thirty (30) days after the end of such period.  Reports, notices and
      other communications to CLARIENT hereunder shall be sent to:

     

    Clarient,
      Inc.

    Attention:
      Corporate Controller

    31
      Columbia

    Aliso
      Viejo, CA 92656

     

    Payments
      by HDC to CLARIENT shall be made by wire transfer of immediately available
      funds
      to the following account:
      _________________________.

     

    C.    Taxes.

     

    1.    Insofar
      as any CLARIENT
      Fees
      due to
      HDC hereunder are subject to taxation by any country under the provisions of
      the
      tax laws of that country, then HDC shall bear such taxes and HDC hereby
      authorizes CLARIENT to withhold such taxes from the payments of
      CLARIENT Fees
      payable
      to HDC in accordance with this Agreement if CLARIENT is either required to
      do so
      under such country’s tax laws or directed to do so by any agency of such
      country’s government.  Whenever CLARIENT deducts such tax from any payments
      due to HDC, then CLARIENT shall furnish HDC with a tax certificate showing
      the
      payment of such tax to the government of such country.  In the event such
      taxes are assessed against CLARIENT by reason of its failure to withhold such
      taxes from any payments which have been paid to HDC in accordance with this
      Agreement, then HDC shall reimburse CLARIENT for such tax assessment, but not
      for any fine, penalty, fee or interest related to CLARIENT’s failure to
      withhold, pay or make
      timely
      payment of such taxes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.    Insofar
      as any HDC Fees due to CLARIENT hereunder are subject to taxation by any country
      under the provisions of the tax laws of that country, then CLARIENT shall bear
      such taxes and HDC hereby authorizes CLARIENT to withhold such taxes from the
      payments of HDC Fees payable to CLARIENT in accordance with this Agreement
      if
      HDC is either required to do so under such country’s tax laws or directed to do
      so by any agency of such country’s government.  Whenever HDC deducts such
      tax from any payments due to CLARIENT, then HDC shall furnish CLARIENT with
      a
      tax certificate showing the payment of such tax to the government of such
      country.  In the event such taxes are assessed against HDC by reason of its
      failure to withhold such taxes from any payments which have been paid to
      CLARIENT in accordance with this Agreement, then CLARIENT shall reimburse HDC
      for such tax assessment, but not for any fine, penalty, fee or interest related
      to HDC’s failure to withhold, pay or make timely payment of such
      taxes.

     

    D.    Late
      Payment.

     

    If
      any
undisputed
      sum
      of
      money owed to a
      party
      hereunder is not paid when due, and
      remains unpaid for a period of fifteen (15) days following receipt of written
      notice of such failure to pay, the unpaid undisputed
      amount
      shall bear interest at the
      rate
      of one and one-half percent (1 1⁄2%), monthly, commencing
      on the
      day payment was due, until paid. 

     

    ARTICLE
      V.    COOPERATION

     

    HDC
      shall
      assist CLARIENT and provide all necessary information requested by CLARIENT
      to
      obtain, at CLARIENT's expense, relevant approval or clearance from the Federal
      Food and Drug Administration or any other applicable federal or state regulatory
      agency whose approval is required to commercialize the Licensed
      Products..

     

    ARTICLE
      VI.    RECORDS

     

    Each
      party
      shall
      keep adequate records in sufficient detail to enable the CLARIENT
      Fees
      and
      the HDC Fees
      to be
      determined
      and
      permit said records
      to be inspected upon
      reasonable notice and
      during
      regular business hours by an independent auditor appointed by the
      party
      requesting the audit
      for this
      purpose, which
      auditor
      shall
      report to the
      parties
      only the
      amount of CLARIENT
      Fees or HDC Fees (as applicable)
      due
      hereunder.

     

    ARTICLE
      VII.    CURRENCY
      CONVERSION CLAUSE

     

    Fees
      shall be paid in U.S.A. dollars.  For converting into U.S.A. dollars any
      fee that accrued in another currency, there shall be used the closing buying
      rate of The Savannah Bank of Savannah, GA applicable to royalty or fee
      transactions under exchange regulations for the particular currency on the
      last
      business day for the accounting period for which payment is due.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    ARTICLE
      VIII.    PATENT
      MAINTENANCE AND PATENT INFRINGEMENT

     

    A.    Patent
      Maintenance.

     

           
      1.    HDC
      shall
      maintain the Licensed Patents, which maintenance shall include retaining one
      or
      more patent attorneys to prosecute and/or direct prosecution of a pending
      application, payment of attorney’s fees and costs for the prosecution of pending
      patent applications, payment of maintenance fees, and any other actions required
      to maintain the rights in the Licensed Patents.

     

    a.    In
      the
      event that HDC is unable or unwilling to maintain any one or more of the
      Licensed Patents, CLARIENT may pay the fees for maintaining the indicated
      patents within Licensed Patent(s) and deduct such payment from any CLARIENT
      Fees
      due under this License Agreement.  HDC shall thereupon assign the indicated
      patents to CLARIENT.  If HDC is unable or unwilling to maintain all or
      substantially all of the Licensed Patents, CLARIENT may at its option, (i)
      maintain the Licensed Patent(s) and deduct such payment from CLARIENT Fees
      due
      under this Agreement; or (ii) terminate the License Agreement upon thirty (30)
      days’ notice to HDC.  

     

    b.    HDC
      shall
      notify CLARIENT before any rights in a Licensed Patent terminate with sufficient
      time to permit CLARIENT to take action to maintain the patent, if it so
      chooses.

     

    B.    Patent
      Infringement.

     

    1.    If
      either
      party learns of a substantial infringement of any of the Licensed Patents in
      the
      Field of Use, in the Licensed
      Territory, such party shall promptly provide written notice of the infringement
      to the other party with reasonable evidence of infringement.  Neither party
      will notify a third party of infringement of any of the Licensed Patents without
      first obtaining consent of the other party, which consent will not be
      unreasonably withheld, if the infringement is within the Field of Use. 
Otherwise, HDC may act unilaterally.  

     

    a.    HDC
      will
      have the primary responsibility to enforce the Licensed Patents, including
      undertaking litigation or other enforcement action against a third party for
      infringement of the Licensed Patents. 

     

    i.    In
      the
      event HDC undertakes litigation or other enforcement action against a third
      party infringer, CLARIENT shall at HDC’s expense, for CLARIENT’s reasonable
      out-of-pocket costs, cooperate with HDC as may be required to support HDC’s
      assertions against the third party infringer in the Field of Use. 

     

    ii.    Any
      proceeds from litigation or other enforcement action will first be applied
      to
      reimburse HDC for expenses incurred in the action.  HDC may deduct an
      additional amount equal to twenty percent (20%) of the total expenses incurred
      in the action as compensation for lost time, business opportunities and other
      difficult-to-quantify losses resulting from HDC’s prosecution of the
      action.  If the infringement is in the Field of Use, remaining proceeds, if
      any, will be treated as HDC Net Proceeds and subject to the HDC Fees.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b.    If
      HDC
      declines to undertake litigation or other enforcement action against a third
      party for infringement in the Field of Use, CLARIENT may at its option elect
      to:
      (i) enforce the Licensed Patent(s) at its own expense, and deduct such expense
      from any CLARIENT Fees due under this License Agreement; or (ii) terminate
      the
      License Agreement upon thirty (30) days’ notice to HDC.  

     

    i.    In
      the
      event CLARIENT undertakes litigation or other enforcement action against a
      third
      party infringer, HDC shall at CLARIENT’s expense, for HDC’s reasonable
      out-of-pocket costs, cooperate with CLARIENT as may be required to support
      CLARIENT’s assertions against the third party infringer. 

     

    ii.    Any
      proceeds from litigation or other enforcement action will first be applied
      to
      reimburse CLARIENT for expenses incurred in the action.  CLARIENT may
      deduct an additional amount equal to twenty percent (20%) of the total expenses
      incurred in the action as compensation for lost time, business opportunities
      and
      other difficult-to-quantify losses resulting from CLARIENT’s prosecution of the
      action.  Remaining proceeds, if any, will be treated as CLARIENT Net
      Proceeds received by CLARIENT and subject to the CLARIENT Fees.

     

    ARTICLE
      IX.    CONFIDENTIALITY

     

    The
      parties have entered into a Mutual Nondisclosure Agreement as of _________,
      200__ (the “NDA“)
      pursuant to which each of the parties agreed to preserve the confidentiality
      of
      the other party’s proprietary information.  The terms of the NDA shall
      continue to govern the parties throughout the term of this
      Agreement.

     

    ARTICLE
      X.    TERMINATION

     

    A.    Term. 
      Unless
      terminated earlier as hereinafter provided, and subject to the provisions of
      paragraph (B) of this Article, this Agreement shall terminate on the
latest
      to
      occur of (i) the fifteenth
      (15th) anniversary of its Effective Date;
      or
      (ii)
      upon the
      expiration of the last of the Licensed
      Patents.

     

    B.    Surviving
      Obligations. 
      The
      termination or
      expiration of
      this
      Agreement shall not relieve either
      party of:

     

    1.    any
      liability under
      Article IX of this Agreement
      for
      damages resulting
      from a breach of the NDA;
      or

     

    2.    its
      obligations to

     

    i.    make
      payment of CLARIENT
      Fees and/or HDC Fees (as applicable)
      pursuant
      to Article IV;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    ii.    maintain
      adequate records under Article VI;

     

    iii.    furnish
      written reports as provided in Article IV;
      and

     

    iv.    make
      payment of CLARIENT
      Fees and/or HDC Fees (as applicable)
      on any
      quantity of Licensed Product that is made prior to the Effective
      Date
      of said
      termination and sold thereafter.

     

    The
      termination of this Agreement shall not terminate either
      party’s
      rights
      under Articles III
      and IX
      hereof.

     

    C.    Termination
      by CLARIENT. 
      CLARIENT
      may terminate this Agreement at any time by giving HDC at least sixty (60)
      days’
prior
      written
      notice. 

     

    D.    Termination
      by HDC.

     

    1.    In
      the
      event that any stipulation or provision of this Agreement is breached by
      CLARIENT, HDC may terminate this Agreement upon sixty (60) days’ written notice
      to CLARIENT.  However, if such breach is corrected within the sixty
      (60) day
      period, and there are no unreimbursed damages resulting from the breach, this
      Agreement and sublicenses shall continue in force.

     

    2.    HDC
      may
      terminate the license granted to CLARIENT in its entirety at any time in the
      event CLARIENT alleges in any action, directly or indirectly, that any of the
      patents within Licensed Patents is invalid.

     

    3.    HDC
      may
      terminate the license granted to CLARIENT in its entirety in the event CLARIENT
      introduces a product competing with Licensed Product into the market place.
      

     

    4.    HDC
      may
      terminate the license granted to CLARIENT in its entirety in the event CLARIENT
      does not exercise reasonable efforts in the sales and marketing of Licensed
      Product evidenced by the fact that Clarient cannot demonstrate any tangible
      evidence of such efforts.

     

    5.    HDC
      may
      terminate the license granted to CLARIENT in its entirety in the event CLARIENT
      ceases entirely to have the ability to carry out the Test due to Clarient’s sole
      fault.

     

    HDC’s
      right to terminate CLARIENT’s license pursuant to Articles X. D. 1,3,4 and 5
      shall be subject to Article XIV.

     

    Subject
      to negotiations by the parties, the termination of CLARIENT’s license pursuant
      to Articles X. D1, 3, 4, and 5 shall be deemed to be a conversion of the
      exclusive license to a nonexclusive license; provided, however, that in the
      event a prospective third-party licensee under Licensed Technology reasonably
      requires an exclusive license and after dispute resolution as described in
      Article XIV, then CLARIENT’s license shall be terminated. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    E.    Insolvency. 
      Should
      either
      party
      (1)
      become insolvent or unable to pay its debts as they mature, or (2) make an
      assignment for the benefit of creditors, or (3) permit or procure the
      appointment of a receiver for its assets, or (4) become the subject of any
      bankruptcy, insolvency or similar proceeding, then the
      other
      party
      may at
      any time thereafter upon
      written
      notice to such
      party, and
      effective concurrent
      with the date of such notice,
      cancel
      this Agreement.

     

    F.    Effect
      of Termination and Return of Technical Information. 
      Upon termination or expiration of this Agreement, the parties shall return
      or
      destroy, at the discretion of the disclosing party, all copies of confidential
      information disclosed or provided by the other party.

     

    G.    Reversion
      of Intellectual Property Rights.  Except as otherwise specified in this
      Agreement, upon termination of this Agreement, all rights in the Licensed
      Technology and any other rights granted under this License Agreement, and any
      sublicense agreements granted by CLARIENT, including any right to sublicense
      fees, shall revert to HDC.

     

    H.    Disposition
      of Licensed Products on Hand at Termination.  Upon termination of this
      Agreement, CLARIENT shall cease its use of Licensed Technology, or any component
      thereof, provided, however, that CLARIENT shall be permitted to sell Tests
      of
      Licensed Products already made pursuant to this Agreement and pay the CLARIENT
      Fees.  

     

    ARTICLE
      XI.    ASSIGNABILITY

     

    A.    Neither
      this
      Agreement nor the rights or licenses herein granted shall
      be
      assignable or otherwise transferable by either
      party
      without
      the prior written consent of the
      other
      party; provided, however, that either party may assign this Agreement in
      connection with the transfer or sale of its business or all or substantially
      all
      of its assets or stocks or in the event of a merger, consolidation, change
      in
      control or similar corporate transaction, without such consent.
      It is
      understood by the parties that CLARIENT may not and shall not utilize this
      License Agreement or any of its rights or obligations hereunder as a collateral
      in any financial transaction. 

     

    B.    In
      the
      event an assignee of either party does not perform all of the obligations of
      such assigning party hereunder, (i) the assigning party shall remain responsible
      and liable for all unperformed obligations and (ii) the non-assigning party
      shall have the right to terminate this Agreement.

     

    ARTICLE
      XII.    APPLICABLE
      LAW

     

    This
      Agreement is acknowledged to have been made in and shall be construed in
      accordance with the laws of the State of Delaware without regard to the
      principles thereof relating to the conflict of laws, provided that all questions
      concerning the construction or effect of patent applications and patents shall
      be decided in accordance with the laws of the country in which the particular
      patent application or patent concerned has been filed or granted, as the case
      may be. Subject to Article XIV, each party hereby subjects itself to the
      jurisdiction the state and federal courts in the State of Delaware.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XIII.    FORCE
      MAJEURE

     

    Neither
      party shall be responsible to the other for delay or failure in performance
      of
      any of the obligations imposed by this Agreement, provided such delay or failure
      shall be occasioned by a cause beyond the control of and without the fault
      or
      negligence of such party,  including
      fire, flood, explosion, lightning, windstorm, earthquake, subsidence of soil,
      failure of machinery or equipment or supply of materials, discontinuity in
      the
      supply of power, court order or governmental interference, civil commotion,
      riot, war, terrorism or terroristic threats, strikes, labor disturbances,
      transportation difficulties or labor shortage.  Notwithstanding the
      aforesaid, if either party fails to a substantial extent for at least
sixty
      (60) days in fulfilling
      any of
      its obligations under this Agreement, the other party may terminate the
      Agreement.

     

    ARTICLE
      XIV.    DISPUTE
      RESOLUTION

     

    In
      the
      event that a dispute arises between the parties, the following procedures shall
      be followed:

     

    A.    Negotiations.
      In
      the
      event that any dispute may arise, the parties shall first seek to resolve any
      disputes by negotiation among senior executives who have authority to settle
      the
      controversy, as follows:

     

    1.    Notification.
      When
      a
      party believes there is a dispute relating to the Agreement, the party will
      give
      the other party written notice of the dispute.

     

    2.    Meeting
      Among Senior Executives.
      The
      senior executives shall meet at a mutually acceptable time and place within
      thirty (30) days after the date of the notice to exchange relevant information
      and to attempt to resolve the dispute.  

     

    3.    Confidentiality.
      All
      negotiations are confidential and shall be treated as compromise and settlement
      negotiations under the United States Federal Rules of Evidence.

     

    B.    Mediation.
      If
      the
      dispute has not been resolved within thirty (30) days after the date of the
      notice of a dispute, or if the party receiving such notice fails or refuses
      to
      meet within such time period, either party may initiate mediation of the dispute
      by sending the other party a written request that the dispute be mediated. 
The party receiving such a written request will promptly respond to the
      requesting party so that all parties can jointly select a neutral and impartial
      mediator and schedule the mediation session.  The parties shall mediate the
      dispute before a neutral, third-party mediator within thirty (30) days after
      the
      date of the written request for mediation.

     

    C.    Litigation.
      Any
      controversy or claim arising out of or relating to this Agreement, or the breach
      thereof, and not settled as described in Article XIV (A) or (B), may be settled
      by litigation in the courts of the State of Delaware.

     

    D.    Miscellaneous.
      Each
      party shall bear its own costs related to any proceeding described in this
      Article XIV.  Nothing provided herein shall prevent a party from seeking
      equitable or injunctive relief.

     

    ARTICLE
      XV.    ADJUDICATION
      OF LICENSED PATENTS

     

    Should
      any Licensed Patents be declared invalid or limited in scope by a final decision
      (from which no appeal is or can be taken) of a court or other tribunal of
      competent jurisdiction in the country in which said patent was granted in an
      action or proceeding initiated by a third party, then the construction placed
      upon the patent by said court or other tribunal shall be followed by the parties
      hereto from and after the date of entry of the decree of said court or tribunal
      and fees shall thereafter be payable to HDC only in accordance with such
      construction.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XVI.    MISCELLANEOUS
      PROVISIONS

     

    A.    Nothing
      herein shall be construed to indicate that this Agreement is an employment,
      partnership or other joint venture agreement, it being fully understood that
      each party is acting as an independent contractor as its own agent and assumes
      full responsibility for its own account and for all of its actions
      hereunder.  Further, each of HDC and CLARIENT acknowledges that this
      Agreement does not constitute HDC as the agent or legal representative of
      CLARIENT, or constitute CLARIENT as the agent or legal representative of
      HDC.  Each of HDC and CLARIENT further acknowledges that neither party is
      authorized to create any obligation on behalf of the other.

     

    B.    Each
      of
HDC
      and
      CLARIENT
      has all
      necessary corporate power to enter into and perform its obligations under this
      Agreement and has taken all necessary corporate action under its respective
      certificates of incorporation and by-laws to authorize the execution and
      consummation of this Agreement.

     

    C.    HDC
      shall
      not be required to grant any additional right with respect to the Licensed
      Technology or furnish information as to which HDC will incur financial or other
      liability to a third party, and no information shall be required to be furnished
      over governmental prohibition or objection.

     

    D.    The
      use
      and disclosure of technical information acquired pursuant to this Agreement
      and
      the exercise of the rights granted by this Agreement shall be subject to the
      export, assets and financial control regulations of the United States of America
      including restrictions under regulations of the United States that may be
      applicable to direct or indirect reexportation of such technical information
      or
      of equipment, Licensed Products or services directly produced by use of such
      technical information.

     

    E.    No
      license or right is granted by implication or otherwise with respect to any
      patent application, patent, trademark or copyright except as specifically set
      forth herein.  No right is granted by either
      party to this
      Agreement to use any registered or unregistered trademark or trade name of
      the
      other
      party.
      

     

    F.    The
      rights and remedies provided in this Agreement are cumulative and not exclusive
      of any rights or remedies provided by law or in equity.

     

    G.    This
      Agreement embodies the entire understanding of the parties and shall supersede
      all previous communications, representations, undertakings or agreements,
      between them, either verbal or written, relating to the subject matter
      hereof. 
      This Agreement may be amended, or any term hereof modified, only by a written
      instrument duly executed by each of the parties hereto. 

     

    H.    This
      Agreement shall be binding upon and inure to the benefit of the successors,
      permitted assignees and personal representatives of the parties.

     

    I.    The
      waiver by either party of a default or breach of any provision of this Agreement
      by the other party shall not operate or be construed as a continuous waiver
      of
      any subsequent default or breach. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    J.    If
      any
      portion of this Agreement shall be found to be illegal or unenforceable, such
      provision shall be changed and interpreted by limiting and reducing its effect
      so as to be enforceable to the full extent compatible with respect to applicable
      law.  The illegality or unenforceability of any one clause shall in no way
      impair the legality or enforceability of any other clause in this
      Agreement.

     

    K.    The
      captions to the several Articles and Sections hereof are not part of the
      Agreement but merely guides or labels to assist in locating and reading the
      several Articles and Sections hereof.  Any reference in this Agreement to
      an Article, Exhibit, Schedule, Attachment or Section shall, unless specifically
      provided, be to an Article, Exhibit, Schedule, Attachment or Section of this
      Agreement.

     

    L.    This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    M.    Except
      as
      specifically set forth herein, none of the provisions of this Agreement shall
      be
      for the benefit of or enforceable by any third party, including, without
      limitation, any creditor of either party hereto.

     

    N.    Any
      written notice required under this Agreement shall be sent to the respective
      addresses for the parties set forth in the introductory paragraphs of this
      Agreement via first class mail and shall be deemed effective five (5) business
      days after the mailing date thereof.  Any written notice provided by
      certified mail, courier, facsimile or overnight delivery service with tracking
      capabilities shall be deemed effective when acknowledged by an official receipt
      or express acknowledgement of receipt.

     

    O.    Neither
      party shall make any public disclosure of, or otherwise disclose to any person
      (other than its officers, employees, accountants, attorneys and agents whose
      duties require them to have access to such information), including but not
      limited to press releases, the existence or terms of this Agreement without
      the
      other party’s prior written consent, unless such disclosure is required by law
      (including securities laws, rules and regulations as well as the rules of any
      exchange on which either of the parties is publicly traded).  In the event
      such disclosure is required by law, the parties shall agree on the language
      of
      such disclosure.  Any disclosure by a party to its officers, employees,
      accountants, attorneys, and/or agents shall be subject to the confidentiality
      restrictions of this Agreement.

     

    P.    Notwithstanding
      anything contained in this Agreement to the contrary, the obligations of the
      parties with respect to the consummation of the transactions contemplated by
      this Agreement, shall be subject to all laws of any government having
      jurisdiction over the parties and this transaction, and to orders, regulations,
      directions or requests of any such government.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

     

    IN
      WITNESS WHEREOF, the parties have caused
      this
      Agreement to
      be
      executed by their duly authorized representatives as of
      the
      Effective Date.

     

    
      	 	
              HEALTH
                DISCOVERY CORPORATION

               

            
	 	
               

              By:       
                /s/
                Stephen D. Barnhill, M.D.

              Name:  
                Stephen
                D. Barnhill, M.D.

              Title:     Chairman
                & CEO

              Date:    
                July
                31, 2007

            
	 	
               

              CLARIENT,
                INC.

               

            
	 	
               

              By:       
                /s/
                Ron Andrews

              Name:  
                Ron
                Andrews

              Title:     President
                & CEO

              Date:    
                July
                30, 2007

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    ATTACHMENT
      A

     

     

    Licensed
      Patents

     

     

    
      	 	 	 
	
              Country/
                Region

               

            	
              Patent/Publication/
                Application No.

               

            	
              Description

               

            
	
              U.S.

               

            	
              7,117,188

               

            	
              Method
                of Identifying Patterns in 

              Biological
                Systems and Uses Thereof 

               

            
	
              U.S.

               

            	
              2007/0092917

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              U.S.

               

            	
              60/880,070

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Cancer

               

            
	
              Australia

               

            	
              2002253879

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              Canada

               

            	
              2,435,254

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              Europe

               

            	
              1459235

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            
	
              Japan

               

            	
              2002-560076

               

            	
              Biomarkers
                for Screening, Predicting, and 

              Monitoring
                Prostate Disease

               

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    ATTACHMENT
      B

    

     

    Licensed
      Biomarkers

     

     

    

      
        	
                Num

                 

              	
                Archival
                  Unigene ID

                 

              	
                Current
                  Unigene ID

                 

              	
                Symbol

                 

              	
                Affy
                  probe

                 

              	
                Pathway

                 

              	
                Target
                  Description

                 

              
	
                12337

                 

              	
                Hs.7780

                 

              	
                Hs.480311

                 

              	
                DKFZp564

                 

              	
                212412_at

                 

              	
                Unknown

                 

              	
                Consensus
                  includes gb:AV715767 /FEA=

                EST
                  /DB_XREF=gi:10797284 /DB_XREF=est:AV715767 /CLONE=

                DCBATH02
                  /UG=Hs.7780 Homo sapiens mRNA; cDNA DKFZp564A072 (from clone
                  DKFZp564A072)

                 

              
	
                9373

                 

              	
                Hs.21293

                 

              	
                Hs.492859

                 

              	
                UAP1/AGX-1

                 

              	
                209340_at

                 

              	
                Aminosugar
                  metabolism

                 

              	
                gb:S73498.1
                  /DEF=Homo sapiens AgX-1 antigen mRNA; complete cds. /FEA=

                mRNA
                  /PROD=AgX-1 antigen /DB_XREF=

                gi:688010
                  /UG=Hs.21293 UDP-N-acteylglucosamine pyrophosphorylase 1 /FL=gb:AB011004.1
                  gb:NM_003115.1 gb:S73498.1

                 

              
	
                876

                 

              	
                Hs.79037

                 

              	
                Hs.476231

                 

              	
                HSPD1

                 

              	
                200807_s_at

                 

              	
                Mitochondrial
                  control of apoptosis

                 

              	
                gb:NM_002156.1
                  /DEF=Homo sapiens heat shock 60kD protein 1 (chaperonin) (HSPD1);
                  mRNA.
                  /FEA=

                mRNA
                  /GEN=HSPD1 /PROD=heat shock 60kD protein 1 (chaperonin)
                  /DB_XREF=gi:4504520 /UG=Hs.79037 heat shock 60kD protein 1 (chaperonin)
                  /FL=gb:BC002676.1 gb:BC003030.1 gb:M34664.1 gb:M22382.1
                  gb:NM_002156.1

                 

              
	
                1961

                 

              	 	
                Hs.75432

                 

              	
                IMPDH2

                 

              	
                201892_s_at

                 

              	
                de
                  novo guanine nucleotide biosynthesis

                 

              	
                gb:NM_000884.1
                  /DEF=Homo sapiens IMP (inosine monophosphate) dehydrogenase 2 (IMPDH2);
                  mRNA.  /FEA=mRNA /GEN=IMPDH2 /PROD=IMP (inosine monophosphate)
                  dehydrogenase 2 /DB_XREF=gi:4504688 /UG=Hs.75432 IMP (inosine
                  monophosphate) dehydrogenase 2 /FL=gb:J04208.1 gb:NM_000884.1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]