USA Procurement Settlement Agreement dated March 12, 2021

Exhibit 10.5 

SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (“Settlement Agreement”) is entered into this 12^th day of March, 2021 between SCWorx Corp. (“SCWorx”) on the one hand, and USA Procurements, LLC (“USAP”) on the other hand. SCWorx and USAP are collectively referred to herein as the “Parties.”

WHEREAS, on May 26, 2020, SCWorx and USAP entered into a Purchase Agreement (“the Contract”) pursuant to which, among other things, USAP agreed to sell and SCWorx agreed to purchase 150,000 gowns at a price of $3.00 per gown.

WHEREAS, pursuant to the Contract, on May 27, 2020, SCWorx wired the deposit to USAP consisting of 30% of the purchase price, or $135,000.00, which deposit was to be applied to the Contract purchase price.

WHEREAS, on June 25, 2020, pursuant to Invoice “III/39,” SCWorx wired the sum of $374,000.00 to USAP.

WHEREAS, on July 24, 2020, SCWorx wired the sum of $30,000.00 to USAP.

WHEREAS, SCWorx has made total payment of $539,000.00 to USAP.

WHEREAS, to date, SCWorx has only received and USAP has only delivered 3,000 gowns under the Contract; and

WHEREAS, disputes have arisen between the Parties regarding their respective obligations under the Contract; and

WHEREAS, the Parties now wish to resolve fully and finally any and all disputes, claims, complaints, grievances, charges, actions, petitions, and/or demands between them related to the Contract;

NOW THEREFORE, in consideration of the promises and mutual covenants herein contained which the Parties mutually agree constitute good, adequate, and sufficient consideration herefor, the Parties agree as follows for the purpose of being legally bound hereto in all respects:

(A). Within three (3) business days after the execution by SCWorx of this Settlement Agreement, USAP shall make available for delivery to SCWorx 87,000 level 4 blue medical gowns (double laminate, 35g weight), which gowns shall comply with the specifications required by the Contract and be packaged in compliance with the packaging example annexed as Ex. A, including such packaging indicating that the gowns are FDA approved as well as enclosing the spec sheet reflected in Ex. A, and be in good and saleable condition. SCWorx shall arrange for the shipping of the gowns and agrees to pay for the reasonable cost of shipping the gowns, including securing reasonable insurance for the shipment.

(B). Within three (3) business days after execution by USAP of this Settlement Agreement, SCWorx agrees to deposit Twenty-Thousand Dollars and No Cents ($20,000.00) into a third-party escrow account (the “Escrowed Payment”) which Escrowed Payment will be released upon satisfactory inspection by SCWorx or its designee of the gowns described in paragraph 1(A).

The Parties understand and acknowledge that this Settlement Agreement constitutes a compromise and settlement of actual or potential disputed claims regarding the Contract and the performance thereunder. No action taken by the Parties hereto, or any of them, either previously or in connection with this Settlement Agreement shall be deemed or construed to be: (a) an admission of the truth or falsity of any claims made or potential claims against the Parties; or (b) an acknowledgement or admission by any Party of any fault or liability whatsoever to any other Party, or to any third party.

The Parties agree that from this time forward each Party will refrain from making to a third party any defamatory, derogatory, or disparaging statements about the other, or any person or entity associated with or representing the other.

The Parties hereby acknowledges that each of them has had the opportunity to or has been represented by counsel of his or its choosing in connection with the execution and delivery of this Settlement Agreement, that each of the Parties and their counsel has reviewed this Settlement Agreement prior to execution.

The written pages making up this Settlement Agreement represent the entire agreement and understanding between the Parties concerning the subject matter of this Settlement Agreement and supersedes any and all prior agreements or understandings, unless otherwise set forth herein. No materials outside the body of this Settlement Agreement, either written or oral, shall constitute a part of the terms or conditions of this Settlement Agreement, except where otherwise stated herein.

In the event that any provision or section of this Settlement Agreement is held illegal, invalid, or unenforceable, this Settlement Agreement shall continue in full force and effect without said provision, section or portion thereof and the Settlement Agreement shall remain otherwise unaffected.

This Settlement Agreement shall be construed and interpreted in accordance with the laws of the State of New York. Any disputes or litigation arising out of this Settlement Agreement shall be governed by New York law and any action commenced by either of the parties shall be commenced in the courts of the State of New York, County of New York, or, if applicable, the United States District Court for the Southern District of New York and the parties hereby irrevocably submit to the personal jurisdiction of any such courts.

The Parties represent and warrant that each has not assigned, pledged, or otherwise in any manner whatsoever, sold or transferred the rights to any dispute regarding the Contract.

This Settlement Agreement may not be altered or amended, except by written agreement between all the Parties.

This Settlement Agreement shall be binding on, and shall be enforceable against, and shall inure to the benefit of the Parties to this Settlement Agreement and their respective past and present managers, officers, directors, affiliates, member firms, subsidiaries, parents, successors, shareholders, members, partners, general partners, limited partners, principals, participating principals, managing members or other agents, management personnel, attorneys, servants, employees, representatives of any other kind (and any officers, directors, members or shareholders of any of the foregoing which are not natural persons), spouses, estates, executors, estate administrators, heirs, and assigns.

No provision of or rights under this Settlement Agreement may be waived or modified unless in writing and signed by the Party whose rights are thereby waived or modified. Waiver of any one provision herein shall not be deemed to be a waiver of any other provision herein (whether similar or not), nor shall such waiver constitute a continuing waiver unless otherwise expressly so provided.

In consideration of the covenants and agreements set forth in this Settlement Agreement, the Parties hereby agree that upon the performance of the obligations set forth herein, the Contract is terminated and neither party shall have any further rights or obligations under the Contract. In the event the gowns are not in compliance with Paragraph 1(A) of this Settlement Agreement, this Settlement Agreement shall be deemed null and void .

Any notices required or permitted to be given hereunder shall be given in writing and shall be delivered (a) by electronic mail and (b) by commercial overnight courier that guarantees next day delivery and such notices shall be addressed as follows:

or to such other address as either party may from time to time specify in writing to the other party.

The Parties acknowledge that each is to bear its own costs, fees, and expenses, including attorneys’ fees, incurred in connection with the disputes regarding the Contract, except as set forth in Paragraph 19 of this Settlement Agreement.

In the event of any litigation arising out of or concerning a breach of this Settlement Agreement, the prevailing Party shall be entitled to an award against the nonprevailing party of its reasonable attorney’s fees and costs.

The various headings of this Settlement Agreement are inserted for convenience only and shall not affect the interpretation of this Settlement Agreement.

This Settlement Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Original signatures transmitted by electronic mail or facsimile shall be deemed to be original signatures. No Party shall be bound hereby unless and until all other Parties have executed this Settlement Agreement.

Each individual signing this Settlement Agreement in a representative capacity acknowledges and represents that he is duly authorized to execute this Settlement Agreement in such capacity in the name of, and on behalf of, the designated corporation, partnership, limited liability company, trust or other entity.

This Settlement Agreement shall be deemed to have been prepared jointly by the parties hereto, and any uncertainty or ambiguity existing herein shall not be interpreted against any party by reason of its drafting of this Settlement Agreement, but shall be interpreted according to the application of the general rules of interpretation for arm’s length agreements.

IN WITNESS WHEREOF, the Parties hereto have caused this Settlement Agreement to be duly executed as of the date indicated on the first page of this Settlement Agreement.

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