SETTLEMENT AGREEMENT AND MUTUAL RELEASE This Settlement Agreement and Mutual Release ("Agreement") is entered into as of January 10, 2025, by and between Quantum Innovations Corporation, a Delaware corporation with its principal place of business at 789 Innovation Drive, San Jose, California 95110 ("Quantum"), and Meridian Technologies Limited, a corporation organized under the laws of Ontario, Canada, with its principal office at 456 Commerce Street, Toronto, Ontario M5V 2A8 ("Meridian").
RECITALS WHEREAS, on March 15, 2022, the parties entered into a Technology Licensing Agreement ("Original Agreement") pursuant to which Meridian granted Quantum an exclusive license to utilize certain proprietary semiconductor manufacturing technologies in North American markets; WHEREAS, a dispute arose regarding the interpretation of exclusivity provisions contained in Section 3.2 of the Original Agreement, specifically concerning Quantum's alleged unauthorized sublicensing activities to third-party manufacturers; WHEREAS, on June 8, 2023, Meridian commenced litigation against Quantum in the United States District Court for the Northern District of California (Case No. 3:23-cv-04589) seeking injunctive relief and damages totaling approximately $47 million; WHEREAS, Quantum filed counterclaims asserting that Meridian had breached certain technical support obligations and warranty provisions specified in the Original Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, releases, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. SETTLEMENT PAYMENT Quantum shall pay to Meridian the sum of Twelve Million Five Hundred Thousand Dollars ($12,500,000.00) in full and final settlement of all claims, demands, and causes of action asserted in the litigation. Payment shall be made in three installments: (a) Four Million Dollars ($4,000,000.00) within ten (10) business days of execution of this Agreement; (b) Four Million Dollars ($4,000,000.00) on July 1, 2025; and (c) Four Million Five Hundred Thousand Dollars ($4,500,000.00) on January 1, 2026. All payments shall be made by wire transfer to an account designated by Meridian.
2. AMENDED LICENSE TERMS The parties agree to amend the Original Agreement as follows: (a) Quantum's license shall be modified from exclusive to non-exclusive effective immediately; (b) Meridian shall reduce the ongoing royalty rate from 8.5% to 6.0% of net revenues derived from licensed technologies; (c) Quantum shall be permitted to sublicense the technologies to up to three (3) qualified manufacturing partners, subject to Meridian's prior written approval, which shall not be unreasonably withheld; (d) The license term shall be extended from ten (10) years to fifteen (15) years from the effective date of the Original Agreement.
3. MUTUAL RELEASE Each party hereby irrevocably and unconditionally releases and forever discharges the other party, together with its officers, directors, employees, agents, successors, and assigns, from any and all claims, demands, damages, actions, causes of action, and liabilities of whatever kind or nature, whether known or unknown, which arise out of or relate to the Original Agreement or the litigation, including but not limited to all claims that were asserted or could have been asserted in the litigation.
4. DISMISSAL WITH PREJUDICE Within five (5) business days following Quantum's initial settlement payment, the parties shall file a joint stipulation of dismissal with prejudice of all claims and counterclaims in the litigation. Each party shall bear its own attorneys' fees and costs incurred in connection with the litigation.
5. CONFIDENTIALITY The parties agree to maintain the confidentiality of the terms of this Agreement, except as required by applicable law, regulation, or court order, or as necessary to enforce the terms hereof. Neither party shall make any public statement regarding this settlement without the prior written consent of the other party.