Settlement Agreement - Mesa Partners Inc., NCT Group Inc. and Distributed Media Corp.
SETTLEMENT AGREEMENT
This Settlement Agreement, effective as of the 3rd day of December 2002, is
by and between Mesa Partners, Inc. ("Mesa"), duly organized and existing under
the laws of the State of Delaware and having its principal place of business at
34 South Erie Avenue, Montauk, New York 11954, and NCT Group, Inc. ("NCT") and
Distributed Media Corporation, formerly known as DistributedMedia.com, Inc.
("DMC" and collectively with NCT, the "Companies"), corporations duly organized
and existing under the laws of the State of Delaware and having their principal
places of business at 20 Ketchum Street, Westport, Connecticut 06880. As used in
this Settlement Agreement, the term "party" means the Companies or Mesa, as the
context indicates, and the term "parties" means the Companies and Mesa.
WHEREAS, there is an action currently pending in the Supreme Court of the
State of New York, County of Suffolk entitled Mesa Partners, Inc., v. NCT Group,
Inc., and Distributed Media Corporation, formerly known as DistributedMedia.com,
Inc. Index No. 02/03002 (the "Action");
WHEREAS, in the Action, Mesa, as plaintiff, has asserted claims against the
Companies, as defendants, that Mesa is entitled to payment from the Companies
under or in connection with a certain agreement for services between DMC and
Mesa dated March 1, 2000 (the "Contract");
WHEREAS, in the Action, the Companies have denied Mesa's allegation that it
is entitled to payment under the Contract and asserted several affirmative
defenses; and
WHEREAS, the parties, after due consideration, have determined to resolve
and settle any and all claims, controversies, disputes and causes of action,
whether asserted or unasserted, known or unknown, or whether in law, equity or
otherwise, relating to, arising out of, or in any way concerning the Action
and/or the Contract, without any admission of liability or wrongdoing on the
part of or on behalf of either party, pursuant to the terms and conditions
enumerated hereafter.
1. Consideration.
A. This Settlement Agreement must be approved by the Supreme Court of
the State of New York, County of Suffolk (the "Court") after a hearing
which shall be scheduled as soon as is practicable (the "Hearing"). If the
Court fails or refuses to approve this Settlement Agreement, it shall be of
no force or effect on either party hereto.
B. Immediately upon the occurrence of the last of (a) Court approval
of this Settlement Agreement and (b) Mesa's receipt of the shares of stock
described in paragraph 1 (C) below, the Companies and Mesa will take all
steps necessary to dismiss the Action with prejudice and will direct their
respective attorneys to execute and file a stipulation of dismissal with
prejudice in the form attached as Exhibit A. Each party will bear its own
costs and expenses, including attorney fees.
C. Within ten (10) days of the occurrence of the last of (a) execution
and delivery of this Settlement Agreement by both parties and (b) Court
approval of this Settlement Agreement, NCT shall issue to Mesa that number
of shares of NCT common stock, par value $ .01 per share (the "Shares"),
having the aggregate value of $125,000.00 based upon a price per share
which shall be the average of the closing prices of the shares on the NASD
Over -the- Counter Electronic Bulletin Board for each of the ten (10)
trading days immediately preceding the date of this Agreement.
D. In no event shall Mesa sell or transfer, on any trading day, a
number of Shares that exceeds ten percent (10%) of the ten-day average
trading volume for the class of common stock of which the Shares are a
part, calculated as reported on the NASD Over -The-Counter Electronic
Bulletin Board for the ten trading days ending with the trading day
immediately preceding the day of Mesa's sale or transfer.
E. It is the intent of the parties that, upon delivery of the Shares
to Mesa, resale of the Shares in the United States by Mesa shall be exempt
from registration under the Securities Act of 1933, as amended (as so
amended, the "Securities Act"), by virtue of Section 3(a)(10) of the
Securities Act. In connection therewith, the parties intend that the Court
approval referred to in paragraph 1 of this Settlement Agreement be after a
hearing upon the fairness of the terms and conditions of this Settlement
Agreement. NCT, at its expense, shall cause to be prepared, a motion
seeking approval of the Settlement Agreement. Said motion shall be filed
within fourteen days of the date of this Settlement Agreement. Thereafter,
the parties shall use their best efforts to have the Court hear and decide
said motion within ninety days of this Settlement Agreement. In the event
that the Court has not decided the motion within 90 days of the date of
this Agreement, Mesa, upon written notice sent to defendant's counsel
Benjamin Green, Emmet, Marvin & Martin, LLP, 120 Broadway, New York, New
York 10271, by certified mail, return receipt requested, may withdraw from
this Settlement Agreement and it shall thereafter be of no force or effect
on any of the parties hereto.
F. Mesa hereby represents to NCT that it is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act.
Mesa is acquiring the Shares for its own account for investment and not with a
view toward any resale or redistribution. Mesa has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the Shares. Mesa recognizes that NCT has a limited
financial and operating history and that an investment in any of the Shares
involves a high degree of risk. Mesa acknowledges receipt from NCT of public
information satisfactory to Mesa regarding NCT and the Shares. Mesa has had an
opportunity to review the books and records of NCT and an opportunity to ask
questions of and receive answers from officers of NCT concerning the Shares and
the terms and conditions of this transaction, and all such questions have been
answered to Mesa's satisfaction. Nothing in this Agreement shall affect in any
way the obligation of a holder of Shares to comply with all applicable Federal
and State securities laws upon any resale of Shares.
2. No Admission of Liability. Nothing in this Settlement Agreement shall be
construed as an acknowledgement, admission, concession, or stipulation of
liability or wrongdoing by either party.
3. Releases.
A. Release by Mesa. In consideration of receipt of the Shares and of
the Companies entering into this Agreement, Mesa agrees to, and hereby does
irrevocably, unconditionally and generally release and forever discharge
the Companies and their affiliates, parents, subsidiaries, predecessors,
divisions, directors, officers, shareholders, employees, agents, attorneys,
and successors and assigns from any and all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims,
counterclaims and demands whatsoever, in law, admiralty or equity, known or
unknown, against the Companies, which Mesa ever had, or which Mesa now has
as of the date of this Agreement including, but not limited to, any and all
claims arising out of the Contract and/or which were asserted or could have
been asserted in the Action.
B. Release by the Companies. In consideration of Mesa entering into
this Agreement, the Companies agree to, and hereby do irrevocably,
unconditionally and generally release and forever discharge Mesa and its
affiliates, parents, subsidiaries, predecessors, divisions, directors,
officers, shareholders, employees, agents, attorneys, and successors and
assigns from any and all actions, causes of action, suits, debts, dues,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses,
damages, judgments, extents, executions, claims, counterclaims and demands
whatsoever, in law, admiralty or equity, known or unknown, against Mesa,
which the Companies ever had, or which the Companies now have as of the
date of this Agreement including, but not limited to, any and all claims
arising out of the Contract and/or which were asserted or could have been
asserted in the Action.
C. The parties declare that they fully understand the terms and scope
of the above releases and that they have had the opportunity to be, or have
been, advised by counsel in connection with the above releases and the
settlement of any and all potential disputes between them.
4. Modification & Amendments. This Settlement Agreement may not be
modified, altered, or amended except by written agreement of the parties.
5. Waiver. Any waiver of any provision of this Settlement Agreement must be
in writing. Any waiver or failure to enforce any provision of this Settlement
Agreement on one occasion will not be deemed a waiver of any other provision or
of such provision on any other occasion.
6. Binding Effect. This Settlement Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
7. Assignment of Claims. Mesa represents and warrants that it has not
assigned any claim that it had or may have against the Companies, their
affiliates, parents, subsidiaries, predecessors, divisions, directors, officers,
shareholders, employees, agents, attorneys, and successors and assigns,
including but not limited to those claims set forth in the Action.
8. Choice of Law. This Settlement Agreement is made in the state of New
York and will be construed and governed in accordance with New York law as
applied to contracts made and performed entirely within New York.
9. Severability. The provisions of this Settlement Agreement shall be
deemed severable. Therefore, if any part or provision of this Settlement
Agreement is rendered void, invalid, or unenforceable, in any jurisdiction, then
such part or provision shall be severed from the remainder of this Settlement
Agreement only as to such jurisdiction. Such severance shall not affect the
validity or enforceability of the remainder of this Settlement Agreement unless
the severance substantially impairs the value of the whole agreement to any
party.
10. Entire Agreement. The Companies and Mesa declare (a) that they have
carefully read this Settlement Agreement, (b) that they know and understand its
contents, (c) that its execution is a voluntary and authorized act, and (d) that
they have not been influenced to execute it by any representation of the other
party not contained in this Settlement Agreement. This Settlement Agreement has
resulted from negotiations between parties who are represented by counsel, who
have substantially equal bargaining power, and who are under no compulsion to
execute or deliver a disadvantageous agreement. No ambiguity or omission in this
Settlement Agreement shall be construed or resolved against a party on the
ground that this Settlement Agreement or any of its provisions was drafted or
proposed by that party.
11. Counterparts.
A. This Settlement Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
B. This Settlement Agreement shall be binding upon the exchange of
facsimile copies of signature pages from separately signed originals, and
then subsequently formalized by the prompt exchange of the signed
originals.
IN WITNESS WHEREOF, the parties hereto have caused this Settlement
Agreement to be duly executed by their duly authorized representatives as
of the effective date set forth above.
MESA PARTNERS, INC.
By:
-----------------------------------
Name:
Title:
NCT GROUP, INC.
By:
-----------------------------------
Name:
Title:
DISTRIBUTED MEDIA
CORPORATION, formerly known as
DISTRIBUTEMEDIA.COM, INC.
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT "A"
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF SUFFOLK
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Index No.: 02-03002
MESA PARTNERS, INC.,
Plaintiff,
- against -
NCT GROUP, INC., and DISTRIBUTED
MEDIA CORPORATION, formerly known as
DISTRIBUTEDMEDIA.COM, INC.,
Defendants.
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STIPULATION OF DISMISSAL
IT IS HEREBY STIPULATED AND AGREED, by and between the undersigned, the
attorneys of record for all the parties to the above-entitled action, pursuant
to CPLR ss.3217, that whereas no party hereto is an infant or incompetent person
for whom a committee has been appointed or conservatee and no person not a party
has an interest in the subject matter of the action, the above-entitled action
be, and the same hereby is, discontinued with prejudice, each party to bear its
own costs.
This Stipulation may be filed without further notice with the Clerk of the
Court.
Dated: December ___, 2002
JONATHAN DAVID BROWN EMMET, MARVIN & MARTIN, LLP
By: By:
----------------------------- -----------------------------------
Jonathan David Brown Benjamin H. Green
737 Roanoke Avenue Karlene J. Rogers
Riverhead, New York 11901 120 Broadway, 32nd Floor
(631) 727-3948 New York, New York 10271
Attorneys for Plaintiff (212) 238-3000
Attorneys for Defendants
SO ORDERED:
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J.S.C.