Sharman Networks, owner of the Kazaa P2P program, said Thursday that it had reached a settlement with the record industry that would immediately drop all pending litigation against the company. Sharman will also pay the industry more than $100 million and immediately go legal as a result of the agreement.

Filtering technologies will be introduced on the P2P service that will make it impossible to share illicit files. Kazaa's P2P technology would now only be used to trade legal files, the two sides said. Record industry advocates hailed the agreement, while Sharman said the distribution deal was a long standing goal of the company.