SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
This Settlement Agreement and Mutual General Release ("Agreement") is
made and entered into as of this 6th day of September, 1994, by and among Gerald
Singer and Leona R. Singer, husband and wife ("Singer"), and Arthur John Murphy
and Joan Murphy, husband and wife ("Murphy") (Singer and Murphy are collectively
hereinafter referred to as the "Licensors"), on the one hand, and Inter-Act
Systems, Incorporated, a North Carolina corporation (formerly known as
Interactive Networks Incorporated) ("ISI") and Network Licensing, Inc., a North
Carolina corporation ("NLI") (ISI and NLI are collectively hereinafter referred
to as "Licensees"), on the other hand, with respect to the following matters:
RECITALS:
WHEREAS, on or about December 31, 1990, Michael R. Jones ("Jones")
entered into a license agreement with Licensors (the "License Agreement"), a
copy of which is attached hereto as Exhibit "A" and made a part hereof as though
set forth at length herein;
WHEREAS, on or about June 15, 1993, Jones assigned the License
Agreement to NLI (the "Assignment"), a copy of which is attached hereto as
Exhibit "B" and made a part hereof as though set forth at length herein;
WHEREAS, on or about June 15, 1993, Licensors and NLI entered into an
addendum to the License Agreement (the "Addendum"), a copy of which is attached
hereto as Exhibit "C" and made a part hereof as though set forth at length
herein;
WHEREAS, Licensees have asserted a reduction in the royalties payable
under the License Agreement and the Addendum under the terms thereof;
WHEREAS, Licensors have made claims against Licensees relating, among
other things, to securities fraud, breach of contract and usurpation of
Licensor's rights in certain intellectual property (the "Claims");
WHEREAS, Licensors deny that the royalties should be adjusted and
Licensees deny responsibility or liability for the Claims and resulting damages
alleged by Licensors, but Licensees and Licensors wish to fully, completely and
finally resolve all claims they have or may have against each other and desire
to avoid the costs and uncertainties of litigation;
WHEREAS, it is the intention of the parties hereto to fully, finally
and forever resolve any and all claims, disputes and differences that they have
or may have against each other, including, but not limited to, those claims
asserted or which could have been asserted in connection with the License
Agreement, the Assignment, the Addendum and the Claims; and
WHEREAS, as part of the resolution of the Claims, the parties hereto
wish to make certain amendments to the License Agreement, the Assignment and the
Addendum.
THE AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and the
covenants and agreements herein contained, and other good and valuable
consideration, the parties hereto agree as follows:
1. PAYMENT OF MONEY.
The $10,000 per month minimum payment (referred to in
Paragraph 2.2 hereof) to be made to the Licensors under Paragraph B of the
License Agreement shall be reinstated as of January 1, 1994 and payment thereof
shall resume beginning with the payment for the month of September, 1994, which
shall be made on September 15, 1994. On September 15, 1994, Licensees shall pay
to the Licensors an aggregate of $58,000, said amount being the difference
between (i) the $10,000 per month payable to the Licensors under Paragraph B of
the License Agreement for the months of January, 1994 through and including
August, 1994 and (ii) the amounts actually paid to the Licensors under the
License Agreement during that same time period. The parties hereto agree that
the endorsement and the negotiation of the checks made by NLI or ISI payable to
the order of any Licensor from January 1, 1994 to the date hereof shall in no
way affect the rights of the Licensors with respect to amounts owed to them
under the License Agreement.
2. MODIFICATIONS TO THE TERMS OF THE LICENSE AGREEMENT,
THE ASSIGNMENT AND THE ADDENDUM.
2.1 The License Agreement is hereby amended by deleting
Paragraph D.3 thereof in its entirety and substituting the following provision
therefor:
"Either party may terminate this License Agreement at any time
after only the minimum payments called for in Paragraph B.1 hereof shall have
been paid to the Licensor for any period of twenty-four (24) consecutive months
beginning on or after October 1, 1994."
2.2 The License Agreement is hereby amended by deleting
Paragraph B.1 thereof in its entirety and substituting the following provision
therefor:
"During the term of this Agreement, Licensee shall pay
Licensor a royalty of two percent (2%) of the gross collected revenues derived
from the business of Licensee, only as such business pertains to the Inventions,
until such time as Licensor has received the aggregate sum of Ten Million
Dollars ($10,000,000), then the royalty shall be reduced to one percent (1%) of
the gross collected revenues derived from the business of the Licensee, only as
such business pertains to the Inventions. Notwithstanding the foregoing,
Licensee shall pay to Licensor not less than the sum of Ten Thousand Dollars
($10,000) per month during the balance of the term of this Agreement. All such
monthly payments shall be due and payable on the 15th day of every month during
the term of this Agreement."
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2.3 The License Agreement is hereby further amended by adding
the following provision thereto as Paragraph B.5:
" 5. In the event that any claim is made by Paul Nash or an assignee,
successor, heir, legatee or representative of Paul Nash ("Nash"), as to the
title, ownership or inventorship of United States Patent No. 5,305,195,
Licensees shall continue to pay to Licensors the full royalty rate as provided
herein unless and until there is a judgment by a court of competent jurisdiction
against Licensors as to the challenged patent. Upon the issuance of such
judgment, the parties shall have such rights and obligations as to each other as
provided by law and by this Agreement."
2.4 The Addendum is hereby amended by deleting Paragraph 1
thereof in its entirety.
2.5 Except as hereby modified or amended, the License
Agreement, the Assignment and the Addendum shall continue in full force and
effect unchanged.
3. MUTUAL GENERAL RELEASE.
In consideration of all of the terms and conditions of this
Agreement, the obligation to continue to perform the executory provisions of
this Agreement and the agreements attached hereto as Exhibits (as amended or
revised herein) and the other agreements set forth herein Licensors,
individually and collectively, on the one hand, and Licensees, individually and
collectively, on the other hand, and on behalf of their respective successors,
assigns, heirs, legatees and representatives, fully and forever release and
discharge the others, their successors, assigns, heirs, employees, agents and
representatives, and each of them, of and from all manner of actions, causes of
action, claims, demands, costs, damages, liabilities, losses, obligations,
expenses and compensation of any nature whatsoever in law or in equity, known
and unknown, arising prior to the date hereof including, but not limited to,
those asserted or which could have been asserted in connection with the Claims.
Notwithstanding any provision hereof to the contrary, Gerald Singer does not
release or discharge ISI or NLI from any claim he may have against either of
them for the payment of legal fees claimed owing to him, if any, for any legal
services provided by him in connection with procuring patents on the Inventions
(as that term is defined in the License Agreement) and the rights, obligations
and warranties of the parties under the License Agreement, the Assignment and
the Addendum, as modified or amended pursuant to Article 2 hereof, shall
continue in full force and effect.
4. CIVIL CODE ss. 1542.
The Mutual General Release set forth in Section 3 hereof is
and shall be a release of all claims, whether known or unknown, as provided
therein, and Licensors and Licensees hereby release all rights reserved to any
of them of ss. 1542 of the Civil Code of the State of California, which reads as
follows:
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"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
In waiving the provision of ss. 1542 of the Civil Code,
Licensors and Licensees acknowledge that they may hereafter discover facts in
addition to or different from those which they now believe to be true with
respect to the subject matter of the release and other matters herein released,
but agree that the release herein given shall be and remain in effect as a full
and complete general release notwithstanding the discovery or existence of any
such additional or different facts, of which the parties expressly assume the
risk.
5. NOTICES.
Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to or sent by
registered or certified mail, postage prepaid, by overnight delivery service or
by prepaid telegram addressed as follows:
If to the Licensors: Gerald and Leona R. Singer
3142 Pacific Coast Highway
Torrance, California 90505
Arthur J. and Joan Murphy
18337 Superior Street
Northridge, California 91325
With copies to: Matthias & Berg
Attorneys at Law
515 South Flower Street
Suite 700
Los Angeles, California 90071
Attn: Jeffrey P. Berg, Esq.
If to the Licensees: InteroAct Systems, Incorporated
327-D Riverside Avenue
Westport, CT 06880
Network Licensing, Inc.
327-D Riverside Avenue
Westport, CT 06880
With copies to: Schell Bray Aycock Abel &
Livingston L.L.P.
Attorneys at Law
230 North Elm St., Suite 1500
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Greensboro, NC 27401
Attn: Doris R. Bray, Esq.
or such other address or addresses as shall be furnished in writing by any party
in the manner set forth herein for giving notices hereunder, and any such notice
or communication shall be deemed to have been given as of the date so delivered,
mailed or telegraphed.
6. NON-ADMISSION OF LIABILITY.
It is understood and agreed that this Agreement constitutes a
compromise of disputed claims, and that neither this Agreement nor any
consideration given hereunder, concurrently herewith, or pursuant hereto, is to
be advocated or construed as an admission of any liability on the part of any
party hereto.
7. BEAR OWN COSTS.
The parties hereto agree that each shall bear their own costs,
expenses and attorneys fees incurred in connection with the dispute regarding
the Claims, and in the negotiation and drafting of this Agreement.
8. WARRANTY AND NONASSIGNMENT OF CLAIMS.
Licensors and Licensees agree.. covenant, represent and
warrant that they (a) are the sole and lawful owners of all right, title and
interest in and to each and every claim or matter hereby released, and (b) have
not heretofore assigned or transferred, or purported to or attempted to assign
or transfer, to any person or entity, any claim or other matter herein released.
Any party in breach of this Section 8 shall indemnify, defend and hold harmless
the other party(ies) hereto from any and all claims arising out of or relating
to any assignment or transfer and any purported or attempted assignment or
transfer contrary to the terms of this Section 8.
9. ENTIRE AGREEMENT.
The parties hereto declare, warrant and represent that no
promise, statement, representation, inducement or agreement not herein expressed
is relied upon or made the basis for entering into this Agreement or agreeing to
any of the terms hereof, that this document embodies and sets forth the entire
agreement and understanding between them relating to the subject matter hereof,
and that this document merges and supersedes all prior discussions, agreements,
understandings, representations, conditions, warranties, covenants and all other
communications between them on or relating to said subject matter.
10. RECITALS.
Each recital hereof is a material part of this Agreement, is
incorporated herein and is a material inducement to the parties entering into
this Agreement.
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11. CAPTIONS.
The paragraph titles or captions used in this Agreement are
inserted only for the convenience of reference and shall in no manner modify,
expand, limit, explain, construe or describe the scope of or intent or in any
other way affect the terms or conditions of this Agreement.
12. WAIVER.
No waiver or indulgence of any breach or series of breaches of
this Agreement shall be deemed or construed as a waiver of any other breach of
the same or any other provision hereof or affect the enforceability of the
remainder of this Agreement; and in any event, no waiver shall be valid unless
executed in writing.
13. AMENDMENTS.
Any amendment, modification, addendum, or revision of this
Agreement or any Exhibit hereto, shall be valid only if in writing and signed by
the party(ies) to be bound, in which event there need be no legal consideration
therefor.
14. SEVERABILITY.
In the event any provision, interpretation or application of
this Agreement is deemed to be invalid, inoperable or unenforceable for any
reason, the parties hereby agree that only that provision, interpretation or
application be rendered invalid, inoperable or unenforceable, and the remaining
provisions, interpretations and applications shall not be affected and shall
remain effective and fully enforceable.
15. REFERENCE TO PARTIES AS SINGULAR.
Where any party hereto is referred to in the singular or
plural, whether by noun or pronoun, the singular form shall be construed to
include the plural, so as to apply to any or all such parties, or to each and
every party, as the case may be.
16. NO STRICT CONSTRUCTION.
The language of this Agreement shall be construed as a whole,
according to its fair meaning and intent, and not strictly for or against any
party hereto, regardless of who drafted or was principally responsible for
drafting this Agreement or any specific term or condition hereof. This Agreement
shall be deemed to have been drafted by all parties hereto and no party hereto
shall urge otherwise.
17. SUCCESSORS AND ASSIGNS.
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This Agreement and the rights and obligations hereunder, shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
18. FURTHER COOPERATION.
The parties hereto agree to execute and deliver such further
instruments and take such further actions as the parties shall reasonably
request to effectuate the intent of the parties as expressed herein, including
without limitation, the dismissal with prejudice by Licensees of the civil
action filed against Licensors in the United States District Court for the
Eastern District of North Carolina.
19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall constitute one and the same instrument and be binding and
enforceable as if all parties had executed the same copy hereof.
20. AUTHORITY.
Each party executing this Agreement represents and warrants that he has
the full authority to do so, and that he has been expressly authorized to bind
his respective company, principal or employer to all of the terms hereof.
21. EXECUTION KNOWING AND VOLUNTARY.
Each party hereto acknowledges and represents that he (a) has fully and
carefully read this Agreement prior to execution, (b) has been, or has had the
opportunity to be, fully apprised by his attorneys of the legal effect and
meaning of this document and all of the terms and conditions hereof, (c) has had
the opportunity to make whatever investigation or inquiry deemed necessary or
appropriate in connection with the subject matter of this Agreement, (d) has
been afforded the opportunity to negotiate as to any and all terms hereof, and
(e) is executing this Agreement as a free and voluntary act.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed as of the day and year first above written.
("Licensors")
/s/ GERALD SINGER (Seal)
Gerald Singer
/s/ LEONA R. SINGER (Seal)
Leona R. Singer
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/s/ ARTHUR JOHN MURPHY (Seal)
Arthur John Murphy
/s/ JOAN MURPHY (Seal)
Joan Murphy
Approved as to Form and Content:
MATTHIAS & BERG
Attorneys at Law
By: /s/ MICHAEL R. MATTHIAS
Michael R. Matthias, Esq.
Attorneys for Licensors
("Licensees")
InteroAct Systems, Incorporated
a North Carolina corporation
By: /s/ WILLIAM F. PENWELL
Its: President
Network Licensing, Inc.
a North Carolina corporation
By: /s/ WILLIAM F. PENWELL
Its: President
Approved as to Form and Content:
Schell Bray Aycock Abel & Livingston L.L.P.
By: /s/ MARK T. CAIN
Mark T. Cain, Esq.
Attorneys for Licensees
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