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Settlement Agreement - Mesa Partners Inc., NCT Group Inc. and Distributed Media Corp.

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                              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


---------------------------------------------
                                                         Index No.:  02-03002
MESA PARTNERS, INC.,

                 Plaintiff,

          - against -

NCT  GROUP,   INC.,  and  DISTRIBUTED
MEDIA  CORPORATION, formerly known as
DISTRIBUTEDMEDIA.COM, INC.,

                 Defendants.

---------------------------------------------


                            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:


         ------------------------
         J.S.C.