Exhibit 99.1
SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
This SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE (the "Agreement")
is entered into as of March 23, 2001, by and between Charlie Yang ("Yang"), on
the one hand, and ePhone Telecom, Inc. ("ePhone"), on the other hand.
I. RECITALS
A. The purpose of this Agreement is to settle and compromise all
disputes, claims and controversies existing between the parties, including
without limitation all claims arising out of Yang's employment with ePhone, and
the separation of Yang's employment from ePhone, without any admission of
liability or of any fact, claim or defense.
B. On or about August 16, 1999, Yang and ePhone entered into that
certain Engagement Agreement, dated and effective as of July 8, 1999 (the
"Engagement Agreement").
C. In or about January 2000, Yang's employment with ePhone was
terminated.
D. On or about April 3, 2000, Yang initiated an arbitration proceeding
against ePhone before the American Arbitration Association, San Francisco
Regional Office, Case No. 74-160-00374-00 (the "Action"), to resolve certain
disputes arising out of the Engagement Agreement.
E. Yang and ePhone intend that this Agreement effects a total
resolution and compromise of all claims between them including, without
limitation, those claims related to or arising from the Action, the Engagement
Agreement, Yang's employment with ePhone, and Yang's separation of employment
from ePhone.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement and other good and valuable consideration, and to
avoid further and protracted litigation, it is hereby agreed among the parties
as follows:
II. CONSIDERATION GIVEN BY EPHONE TO YANG
A. Settlement Payment By ePhone. In consideration for the releases,
covenants, promises and representations made in this Agreement, ePhone shall pay
to Yang the sum of $400,000 (four hundred thousand dollars), in the following
amounts, on the following dates:
$100,000 Within one day following receipt by ePhone's
counsel of a fully executed copy of this
Agreement
$ 75,000 April 23, 2001
$ 75,000 May 23, 2001
$ 75,000 June 23, 2001
$ 75,000 July 23, 2001
Payments of the above said sums shall be in the form of check
made payable jointly to "Charlie Yang and Stuart MacKenzie, Esq." Payments not
received by Yang within five (5) business days of the due date shall be deemed
late, and shall render ePhone in default of this Agreement. ePhone may cure such
default by delivering such payment to Yang within five (5) business days of
receipt of written notice of such default. If Yang does not receive such payment
within five (5) business days of ePhone's receipt of written notice of default,
Yang shall be entitled to entry of a Stipulated Judgment against ePhone, in the
amount of the sum of all then outstanding installment payments, plus $100,000
and 100,000 ePhone shares (i.e., a total judgment of $500,000 and 500,000
shares, less any settlement payments already made and shares already transferred
by ePhone). Said Stipulated Judgment shall not require a noticed motion, but may
be entered upon ex parte application by Yang.
It is understood and agreed that Yang is liable for all tax
obligations, if any, with respect to the sums set forth herein. ePhone makes no
warranty as to any tax consequences of such payments, and a determination of the
tax consequences of such payment are the sole responsibility of Yang and his
attorneys. Yang agrees to indemnify and hold ePhone harmless with respect to any
tax obligations related to this Agreement.
B. Issuance of Settlement Shares by ePhone. Within ten business days
following receipt by ePhone's counsel of a fully executed copy of this
Agreement, ePhone shall issue and deliver to Yang and/or his counsel, as Yang
may reasonably request, 400,000 (four hundred thousand) shares of common stock
of ePhone. ePhone shall use its best efforts to ensure that such shares are
registered and/or otherwise rendered "freely tradeable" as soon as possible
following delivery of such to Yang. Yang agrees that he (and/or his counsel, if
applicable) shall not sell more than 50,000 (fifty thousand) shares of such
stock in the aggregate in any calendar month, and agrees and acknowledges that
such trading volume limitation is a material term of this settlement agreement,
the breach of which shall entitle ePhone to recover damages against Yang.
C. General Releases by ePhone. It is understood and agreed that in
consideration of the mutual promises and covenants contained in this Agreement,
and after consultation with counsel, ePhone, itself and its respective current
and former officers, directors, shareholders, employees, representatives,
attorneys and agents, irrevocably and unconditionally release and forever
discharge Yang from any and all causes of action, claims, actions, rights,
judgments, obligations, damages, demands, accountings or liabilities of whatever
kind or character, which ePhone may have against Yang by reason of, arising out
of, touching upon, or concerning the Action, the Engagement Agreement, Yang's
employment with ePhone, and the separation of said employment.
D. Representations and Warranties by ePhone. ePhone represents and
warrants that it has not assigned or subrogated any of its rights, claims or
causes of action against Yang, including any claims referenced in this
Agreement, or authorized any other person or entity to assert such claim or
claims on its behalf, and it agrees to indemnify and hold harmless Yang against
any assignment of said rights, claims and/or causes of action.
III. CONSIDERATION GIVEN BY YANG TO EPHONE
A. General Releases by Yang. In consideration for the releases,
covenants, promises and representations made in this Agreement, and after
consultation with counsel, Yang, for himself and his respective heirs,
representatives, agents, successors and assigns, and anyone else claiming by or
through Yang (including but not limited to General Telecom, Inc.), irrevocably
and unconditionally releases and forever discharges ePhone, and its respective
current and former officers, directors, shareholders, employees,
representatives, heirs, insurers, attorneys and agents, from any and all causes
of action, claims, actions, rights, judgments, obligations, damages, demands,
accountings or liabilities of whatever kind or character, which Yang may have
against them by reason of, arising out of, touching upon, or concerning the
Action, the Engagement Agreement, Yang's employment with ePhone, and the
separation of said employment.
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Yang acknowledges that this general release of claims specifically includes, but
is not limited to, any and all claims for wrongful termination; sexual
harassment; retaliation; breach of contract; breach of the implied covenant of
good faith and fair dealing; inducement of breach; interference with contractual
rights; wrongful or unlawful discharge or demotion; violation of public policy;
invasion of privacy; slander; intentional or negligent infliction of emotional
distress; intentional or negligent misrepresentation; conspiracy; failure to pay
wages, commissions, benefits, expenses, vacation pay, severance pay, attorneys'
fees, or other compensation of any sort; defamation; unlawful effort to prevent
employment; discrimination on the basis of race, color, sex, national origin,
ancestry, religion, age, disability, handicap, medical condition or marital
status; any claim under Title VII of the Civil Rights Act of 1964 (Title VII, as
amended), 42 U.S.C. ss. 2000, et seq., the Age Discrimination in Employment Act
("ADEA"), 29 U.S.C. ss. 621, et seq., the Older Workers Benefit Protection Act
("OWBPA"), 29 U.S.C. ss. 626(f), or the California Fair Employment and Housing
Act ("FEHA"), California Government Code ss. 12940 et seq.; violation of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"); violation of
the Occupational Safety and Health Act ("OSHA") or any other health and/or
safety laws, statutes or regulations; violation of the Employment Retirement
Income Security Act of 1974 ("ERISA"); violation of the Internal Revenue Code;
or violation any other statute, law, or regulation.
B. Representations and Warranties by Yang. Yang represents and warrants
that he has not assigned or subrogated any of his rights, claims or causes of
action against ePhone, including any claims referenced in this Agreement, or
authorized any other person or entity to assert such claim or claims on his
behalf, and he agrees to indemnify and hold harmless ePhone against any
assignment of said rights, claims and/or causes of action.
IV. ADDITIONAL WAIVERS, RELEASES, AND WARRANTIES
A. Yang and ePhone do hereby, for themselves and for each of their
respective heirs, representatives, agents, successors and assigns, expressly
waive and relinquish all rights and benefits afforded by California Civil Code
Section 1542, and do so understanding and acknowledging the significance and
consequences of such specific waiver of California Civil Code Section 1542.
B. Yang and ePhone acknowledge that they are being represented in this
matter by counsel, and that they are familiar with the provisions of California
Civil Code Section 1542. California Civil Code Section 1542 provides as follows:
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.
Thus, notwithstanding the provisions of California Civil Code Section 1542, and
for the purpose of implementing a full and complete release and discharge of the
other, Yang and ePhone expressly acknowledge that this Agreement is also
intended to include in its effect, without limitation, all claims which they do
not know or expect to exist in his or its favor at the time of execution, and
that this Agreement contemplates the extinguishment of any such claim or claims.
C. Denial of Liability. The parties acknowledge that ePhone has denied
and continues to deny any and all liability to Yang for any and all claims in
connection with the Action or otherwise. Each party expressly recognizes that
this Agreement shall not in any way be construed as an admission by ePhone of
any unlawful or wrongful acts whatsoever with respect to Yang or any other
person. ePhone expressly denies any violation of any policy or procedure, or of
any state or federal law or regulation. ePhone specifically denies any liability
to, or wrongful acts against, Yang or any other person on the part of ePhone or
any other employees or agents of ePhone. This Agreement shall not be admissible
in any proceeding as evidence of or any admission by ePhone of any violation of
any law or regulation or wrongful act. This Agreement may, however, be
introduced as evidence in any proceeding to enforce this Agreement.
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D. Dismissal with Prejudice. Immediately following the execution of
this Agreement by Yang and ePhone, Yang's and ePhone's counsel shall execute,
file and serve a Stipulation for Dismissal of the Action. Yang agrees to take
all further steps, and to execute any other documents, which may be necessary to
effect a dismissal of the Action in its entirety, with prejudice, and will
immediately cause such documents to be sent to counsel for ePhone.
E. Further Warranties. Yang specifically represents that, other than
the Action, he has no other pending complaints or charges against ePhone with
any state or federal court or any local, state or federal agency, or in any
other country, based on any events occurring prior to the date of execution of
this Agreement. ePhone represents that it has no pending complaints or charges
against Yang with any state or federal court or any local, state or federal
agency, or in any other country, based on any events occurring prior to the date
of execution of this Agreement.
F. No Future Claims. Yang further agrees and represents that he will
not in the future file, participate in, instigate or encourage the filing of any
lawsuit by any person or entity in any state or federal court or any proceeding
before any local, state or federal agency claiming that ePhone has violated any
local, state or federal laws, statutes, ordinances or regulations, including but
not limited to any laws, statutes or regulations of the State of California or
concerning any allegations of: sexual harassment; retaliation; breach of
contract; breach of the implied covenant of good faith and fair dealing;
inducement of breach; wrongful or unlawful discharge or demotion; violation of
public policy; invasion of privacy; slander; intentional or negligent infliction
of emotional distress; fraud; intentional or negligent misrepresentation;
conspiracy; failure to pay wages, benefits, vacation pay, severance pay,
expenses, or other compensation of any sort; defamation; unlawful effort to
prevent employment; discrimination on the basis of race, color, sex, national
origin, ancestry, religion, age, disability, handicap, medical condition,
marital status or any other protected class; any claim under Title VII of the
Civil Rights Act of 1964 (Title VII, as amended), 42 U.S.C. ss. 2000, et seq.,
ADEA, OWBPA or FEHA; violation of the COBRA; violation of OSHA or any other
worker health and/or safety laws, statutes or regulations; violation of ERISA;
violation of the Internal Revenue Code; or any other tortious or otherwise
wrongful conduct, based upon events occurring prior to the date of the execution
of this Agreement.
V. GENERAL PROVISIONS
A. Costs and Fees. It is agreed and understood that Yang and ePhone
shall bear their own costs and attorneys' fees with respect to the Action,
including all costs and attorneys' fees incurred in connection with, or in any
way related to, the negotiation or consummation of this Agreement.
B. Counsel. The parties acknowledge and represent that, prior to
execution of this Agreement, they have consulted with their respective counsel
concerning the terms and conditions set forth in this Agreement.
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C. Knowing and Voluntary Settlement. Yang and ePhone acknowledge and
represent that they have carefully read and fully understand all of the
provisions of this Agreement, and the terms and conditions set forth in this
Agreement. The parties further acknowledge and represent that they enter into
this Agreement freely, knowingly and without coercion, and based on their own
judgment.
D. Different or Additional Facts. Yang and ePhone acknowledge and agree
that they may later discover facts different from or in addition to those they
now know or believe to be true in entering into this Agreement. Yang and ePhone
agree to assume the risk of the possible discovery of additional or different
facts, including facts which may have been concealed or hidden, and agree that
this Agreement shall remain effective regardless of such additional or different
facts. Each further acknowledges and agrees that the other has no duty to
disclose any fact prior to the execution of this Agreement.
E. Arbitration. Any and all disputes, controversies or claims between
Yang and ePhone arising out of or in any way related to this Agreement,
including without limitation, fraud in the inducement of this Agreement, or
relating to the validity, enforceability or application of this Agreement, shall
be submitted to final and binding arbitration under the auspices and rules of
the American Arbitration Association. There shall be one arbitrator. The parties
agree that they have waived any right to trial by jury. The decision of the
arbitrator shall be final and binding. The prevailing party in any such
arbitration proceeding shall be entitled to his or its costs and reasonable
attorneys' fees. Judgment upon any award rendered may be entered in any court of
competent jurisdiction.
F. Governing Law. This Agreement shall be construed and governed
exclusively by the laws of the State of California, without giving effect to its
conflict of laws provisions.
G. Ambiguities. It is agreed and understood that the general rule that
ambiguities are to be construed against the drafter shall not apply to this
Agreement. In the event that any language of this Agreement is found to be
ambiguous, each party shall have an opportunity to present evidence as to the
actual intent of the parties with respect to any such ambiguous language.
H. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
I. Confidentiality of Agreement and Letter of Reference. The parties
agree to keep the terms of this Agreement confidential; provided, however, that
ePhone may disclose the terms of this Agreement as necessary to comply with SEC
reporting requirements or similar such requirements. The parties agree further
that they will not make disparaging remarks about the other. ePhone further
agrees to provide a "letter of reference" to Yang in substantially the following
form: "Charlie Yang was the President and COO of ePhone from June 1999 until
March 2000, at which time Mr. Yang left to pursue other opportunities. During
his tenure with ePhone, Mr. Yang made valuable contributions to the company, and
ePhone wishes him well in his future endeavors."
J. Amendment, Modification, and Waiver. Any amendment or modification
of this Agreement must be in writing and signed by Yang and ePhone. No waiver by
any party of any breach of any term or provision of this Agreement shall be a
waiver of any preceding, concurrent or succeeding breach of this Agreement or of
any other term or provision of this Agreement. No waiver shall be binding on the
part of, or on behalf of, any other party to this Agreement.
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K. Severability. If any provision of this Agreement is deemed to be
illegal, invalid, or unenforceable, the legality, validity and enforceability of
the remaining provisions shall not be affected.
L. Enforcement Costs. In the event any dispute, controversy or claim
arises out of or in connection with this Agreement or the claims released in
this Agreement, the prevailing party shall be entitled to all reasonable
attorneys' fees, costs and expenses.
M. Entire Agreement. This Agreement contains all of the terms and
conditions agreed upon by the parties regarding the subject matter of this
Agreement. Any prior agreements, promises, negotiations or representations,
either oral or written, relating to the subject matter of this Agreement are of
no force or effect. This Agreement is executed without reliance upon any
representation by any person concerning the nature or extent of injuries,
damages or legal liability.
THE SIGNATORIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS HAVE
BEEN FULLY EXPLAINED BY THE RESPECTIVE ATTORNEYS. THE SIGNATORIES FULLY
UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES
MADE TO ANY SIGNATORY ABOUT THIS AGREEMENT, AND TO SIGN THIS AGREEMENT, ARE
CONTAINED IN THIS AGREEMENT. THE SIGNATORIES ARE SIGNING THIS AGREEMENT
VOLUNTARILY.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
--------------------------
Charlie Yang
ePhone Telecom, Inc.
By: ______________________
Its: _____________________
APPROVED AS TO FORM:
---------------------------
Stuart MacKenzie
Attorney for Claimant Charles Yang
GREENBERG TRAURIG, LLP
By: ___________________________
Gregory D. Trimarche
Attorneys for Defendant ePhone Telecom, Inc.