Settlement Agreement - THINK New Ideas Inc. and Scott Mednick
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Agreement") is entered into as of this
__ day of May 1998, with the intent that it be effective as of May 15, 1998
("Effective Date"), by and between (i) THINK NEW IDEAS, INC., a Delaware
corporation ("THINK"), and SCOTT A. MEDNICK ("Mednick"), and (ii) MEDNICK and
RONALD BLOOM and ADAM CURRY, as to Section 5 only.
RECITALS:
WHEREAS, THINK and Mednick (collectively, the "Parties") entered into
that certain Employment Agreement, dated June 30, 1996, as amended thereafter
from time to time ("Employment Agreement"); and
WHEREAS, Mednick wishes to terminate his employment with THINK; and
WHEREAS, the Parties have mutually agreed to certain terms and
conditions pursuant to which Mednick will terminate his employment with THINK;
and
WHEREAS, said terms and conditions are reflected in the letter
agreement attached hereto as Exhibit A and are intended to serve as a basis for
the Parties entering into this Agreement and the forms of agreements attached
hereto as Exhibits C, D, and E; and
WHEREAS, upon execution by the appropriate parties, this Agreement
shall supersede and replace the Employment Agreement and Mednick's rights under
that agreement shall terminate; and
WHEREAS, Mednick has carefully read and fully understands all the
provisions and effects of this Agreement and the releases contained herein: and
WHEREAS, the Parties hereto desire to put to rest and settle any and
all claims, controversies and differences between them of any sort, origin or
description in order to avoid the costs and uncertainties inherent in resolving
said matters.
NOW, THEREFORE, the Parties, intending to be legally bound hereby and
in consideration of the promises contained herein, do hereby agree as follows:
1. TERMINATION. Mednick acknowledges that, effective as of May 15,
1998, his employment with THINK terminated, after which time he has performed no
further duties, functions or services for THINK.
2. CASH CONSIDERATION, HEALTH INSURANCE AND LIFE INSURANCE. In
consideration of the settlement and release of all claims between the Parties as
set forth herein, THINK shall provide to Mednick the following:
(a) the sum of $936,130 payable in equal bi-monthly
installments over a period of 24 months commencing June 1, 1998 ("Payment
Period");
(b) the right to participate in THINK's health insurance
program during the Payment Period, the cost for said participation to be paid by
THINK;
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(c) a sum of cash equal to the value of four weeks of unused
"vacation" benefits accrued by Mednick during the period commencing July l, 1997
and ending May 15, l998;
(d) a $1,000,000 term life insurance policy, the ownership of
which shall be transferred to Mednick and the premium payments for which will be
paid by THINK for a period of four months after the Effective Date; and
(e) access to the premises of THINK and a right to remove his
personal property for a period of seven (7) calendar days, commencing May 25,
1998.
3. NO OTHER UNPAID SALARY. Excepts as otherwise provided herein,
Mednick acknowledges that he is not entitled to receive any salary, bonuses or
commissions from and after the date of this Agreement.
4. TERMINATION OF EMPLOYMENT AGREEMENT; RESIGNATION. THINK and Mednick
hereby agree that the Employment Agreement, attached hereto as Exhibit B, shall,
from and after the date hereof, be terminated and have no further force or
effect and that Mednick shall resign as President and Chief Executive Officer of
THINK and resign as a member of the Board of Directors of THINK and any
executive committee of THINK.
5. LOCKUP AGREEMENT AND RIGHTS AGREEMENT. In consideration for Mednick
entering into this Agreement (i) Ronald Bloom, Adam Curry and Mednick will enter
into a Lockup Agreement substantially in the form attached hereto as Exhibit C,
and (ii) THINK and Mednick will enter into a Rights Agreement substantially in
the form attached hereto as Exhibit D.
6. COVENANT NOT TO COMPETE. In consideration for the undertakings of
THINK set forth in this Agreement and for other good and valuable consideration,
receipt of which is hereby acknowledged, Mednick hereby covenants and agrees
that, so long as Mednick is receiving any consideration under Section 2(a) of
the Agreement (the "Non-Competition Period"):
(a) ACTIVITIES. Mednick shall not, anywhere in North America
directly or indirectly, individually or as a member of any partnership or joint
venture, or as an officer, director, stockholder, employee or agent of any other
person, firm, corporation, business organization or other entity (except a
charitable organization or entity that is organized and operated under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended), participate in,
engage in, solicit or have any financial or other interest in any activity or
any business or other enterprise in any field which at the time of termination
is competitive with the business or is in substantially the same business as
THINK or any affiliate, subsidiary or division thereof (unless the Board of
Directors shall have authorized such activity and THINK shall have consented
thereto in writing), as an individual or as a member of any partnership or joint
venture, or as an officer, director, stockholder, investor, employee or agent of
any other person, firm, corporation, business organization or other entity;
provided, however, that nothing contained herein shall be construed to prevent
Mednick from acquiring for investment purposes only the stock of any corporation
that competes with THINK, which is listed on a national securities exchange or
traded in the over-the-counter market if Mednick does not and will not as a
result of such investment own more than five percent (5%) of the stock of such
corporation;
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(b) NON-SOLICITATION. Mednick shall not: (i) solicit or induce any
employee of THINK to terminate his employment or otherwise leave THINK's employ
or hire any such employee (unless the Board of Directors shall have authorized
such employment and THINK shall have consented thereto in writing); or (ii)
solicit any clients or customers of THINK, either as an individual or as a
member of any partnership or joint venture, or as an officer, director,
stockholder, investor, employee or agent of any other person, firm, corporation,
business organization or other entity.
7. STOCK OPTIONS. THINK hereby acknowledges that (i) Mednick is a party
to the Amended and Restated 1997 Stock Option Plan ("1997 Plan"), (ii) as such,
the options granted to Mednick thereunder vest on an accelerated basis as a
result of his separation from THINK, and in connection therewith, THINK
represents that:
(a) DIRECTOR OPTIONS. Within sixty (60) days of the Effective Date,
it will register with the Securities and Exchange Commission the Twenty Thousand
(20,000) stock options granted to Mednick in his capacity as a member of the
Board of Directors of THINK; and
(b) EMPLOYEE OPTIONS. Within sixty (60) days of the Effective Date,
it will obtain all necessary approvals so that Mednick may exercise the Eighty
Thousand (80,000) options that were granted to him under the 1997 Plan.
8. PRESS RELEASE. The Parties will jointly prepare a press release,
indicating Mednick's departure and his being available to THINK to provide the
consulting services pursuant to a Consulting Agreement substantially in the form
attached hereto as Exhibit E.
9. MUTUAL RELEASE AND WAIVER. Except as provided for in paragraph 11,
the Parties hereby release and waive any and all claims they may have against
each other, including any claims Mednick may have against THINK, its parents,
subsidiaries, affiliates, predecessors and assigns, past or present, and each of
them and its and their officers, directors, agents, servants and employees
(hereinafter collectively referred to as the "THINK Parties"), from and against
any and all rights, claims, demands, controversies, causes of action and
liabilities of every kind and character whatsoever, known or unknown, in law or
in equity, occurring prior to and including the date of the execution of this
Agreement and in particular; but without limitation of the general terms herein,
any claims of discrimination which could have been filed by or on behalf of
Mednick with any agency or court under any federal, state or local statute,
regulation, ordinance, order, rule, tort, implied or express contract or other
common law theory. This release and waiver applies to any and all claims whether
the claims are past or present, whether they arise from common law or statute,
whether they arise from labor laws or discrimination laws including, but not
limited to, Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, as amended, the Employee Retirement Income
Security Act of 1974, as amended, any federal or state civil rights or
employment discrimination legislation which claims are based on events that have
transpired from the beginning of time to the date of execution of this
Agreement. Mednick further agrees and covenants that should any person,
organization or other entity file, charge, claim, sue or cause or permit to be
filed any civil action suit or legal proceeding involving any matter occurring
at any time in the past, Mednick will not seek or accept any personal relief in
such civil action, suit or legal proceeding. Further, the Parties do hereby
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expressly waive and relinquish, to the fullest extent permitted by law, the
provisions, rights, and benefits of ss. 1542 of the California Civil Code, which
provides --
"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."
and any and all provisions, rights and benefits of any similar state, federal,
or other law, rule or regulation or the common law.
10. MAINTENANCE OF EMPLOYMENT OF ASSISTANT. THINK hereby covenants and
agrees to maintain the employment of Mednick's assistance for a period of no
less than 3 months beyond the Effective Date.
11. FINAL SETTLEMENT. The Parties hereby agree that this Agreement is
in compromise and final settlement among the Parties of all disputed matters and
constitutes full satisfaction of all claims made or which could be made of
whatsoever kind or character which the Parties have or had against each other
from the beginning of time until the Effective Date.
12. RETENTION OF CERTAIN CLAIMS. The Parties expressly acknowledge that
this Agreement is in the nature of a settlement of claims and counterclaims
which either has or had against the other for legal and equitable relief. The
Parties acknowledge further, however, that each expressly retains, and does not
waive, any and all of its or his rights relative to equitable and/or legal
relief under this Agreement.
13. NON-DISPARAGEMENT. The Parties represent, agree, covenant and
promise that they will refrain from disparaging each other in connection with
Mednick's departure and the execution of this Agreement.
14. CONFIDENTIALITY.
(a) INFORMATION. The Parties hereto recognize that it is
fundamental to the business and operation of THINK, its affiliates, subsidiaries
and divisions thereof to preserve the specialized knowledge, trade secrets, and
confidential information of the foregoing concerning the field of advertising,
marketing and interactive Internet solutions. The strength and good will of
THINK is derived from the specialized knowledge, trade secrets, and confidential
information generated from experience through the activities undertaken by
THINK, its affiliates, subsidiaries and divisions thereof. The disclosure of any
of such information and the knowledge thereof on the part of competitors would
be beneficial to such competitors and detrimental to THINK, its affiliates,
subsidiaries and divisions thereof, as would the disclosure of information about
the marketing practices, pricing practices, costs, profit margins, design
specifications, analytical techniques, concepts, ideas, process developments
(whether or not patentable), customer and client agreements, vendor and supplier
agreements and similar items or technologies. By reason of his being an employee
of THINK, in the course of his employment, Mednick had access to, and obtained
specialized knowledge, trade secrets and confidential information such as that
described herein about the business and operation of THINK, its affiliates,
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subsidiaries and divisions thereof. Therefore, so long as Mednick receives
compensation pursuant to Section 2 of this Agreement, Mednick hereby agrees as
follows, recognizing and acknowledging that THINK is relying on the following in
entering into this Agreement:
(i) RETAIN SECRETS. Except as otherwise required by or
compelled by law, Mednick shall keep secret and retain in strict confidence, and
shall not use, disclose to others, or publish any information, other than
information which is in the public domain or becomes publicly available through
no wrongful act on the part of Mednick, which information shall be deemed not to
be confidential information, relating to the business, operation or other
affairs of THINK, its affiliates, subsidiaries and divisions thereof, including
but not limited to confidential information concerning the design and marketing
practices, pricing practices, costs, profit margins, products, methods,
guidelines, procedures, engineering designs and standards, design
specifications, analytical techniques, technical information, customer, client,
vendor or supplier information, employee information, and any and all other
confidential information acquired by him in the course of his past or future
services for THINK or any affiliate, subsidiary or division thereof.
(b) TURNOVER OF DOCUMENTS. If Mednick holds as THINK's property,
notes, memoranda, books, records, papers, letters, formulas or other data and
all copies thereof and therefrom in any way relating to the business, operation
or other affairs of THINK, its affiliates, subsidiaries and divisions thereof,
whether made by him or otherwise coming into his possession, he shall
immediately deliver the same to THINK upon a request made to him by THINK.
15. CONSULTING. Mednick acknowledges that he will provide advice and
counsel to THINK on an "as-needed" basis pursuant to the terms of the Consulting
Agreement attached hereto as Exhibit E. If Mednick provides such assistance to
THINK, THINK agrees to pay Mednick's reasonable expenses incurred as a result
thereof as more fully set forth in that Consulting Agreement.
16. JOINT PREPARATION. This Agreement was jointly drafted by THINK and
Mednick and is not to be construed against either party. Should any provision of
this Agreement be found to be illegal or unenforceable by any court of competent
jurisdiction and cannot be modified to be enforceable, such provision shall
immediately become null and void leaving the remainder of this Agreement in
effect.
17. GOVERNING LAW. This Agreement and any disputes or questions of
interpretation arising hereunder shall be resolved by applying the laws of the
State of California, excluding its conflict of laws principles.
18. REPRESENTATIONS OF PARTIES. In executing this Agreement, the
Parties hereby represent that:
(a) THEY HAVE COMPLETELY AND CAREFULLY READ THIS AGREEMENT;
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(b) THEY HAVE CONSULTED ATTORNEYS CONCERNING THIS AGREEMENT;
(c) THEY KNOW AND UNDERSTAND THE CONTENTS OF THIS AGREEMENT, AND
THAT THE TERMS OF THIS AGREEMENT ARE FULLY UNDERSTOOD AND VOLUNTARILY ACCEPTED
THEREBY;
(d) THEY HAVE SIGNED THIS AGREEMENT IN EXCHANGE FOR THE
CONSIDERATION DESCRIBED HEREIN WHICH THEY ACKNOWLEDGE IS ADEQUATE AND
SATISFACTORY TO HIM;
(e) OTHER THAN THE CONSIDERATION SET FORTH HEREIN, NO PROMISES OR
REPRESENTATIONS OF ANY KIND HAVE BEEN MADE THERETO;
(f) THEY EXECUTE THIS AGREEMENT AS THEIR OWN FREE ACTS AND DEEDS;
AND
(g) THIS AGREEMENT WAS ENTERED INTO WITHOUT FRAUD, DURESS, OR
COERCION.
19. SEVERABILITY. The provisions of this Agreement shall be considered
severable in the event that any of such provisions are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable. Such
invalid, void or otherwise unenforceable provisions shall be automatically
replaced by other provisions which are valid and enforceable and which are as
similar as possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable. Notwithstanding the foregoing, the remaining
provisions hereof shall remain enforceable to the fullest extent permitted by
law.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts and signature pages may be delivered by facsimile, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
21. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement between THINK and Mednick with respect to the subject matter hereof
and thereof. This Agreement may not be amended, changed, modified or discharged,
nor may any provision hereof be waived, except by an instrument in writing
executed by or on behalf of the party against whom enforcement of any amendment,
waiver, change, modification or discharge is sought. No course of conduct or
dealing shall be construed to modify, amend or otherwise affect any of the
provisions hereof.
22. NOTICES. All notices, request, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
physically delivered, delivered by express mail or other expedited service or
upon receipt if mailed, postage prepaid, via first class mail as follows:
(a) To the Company THINK New Ideas, Inc.
and to Ronald 45 West 36th Street
Bloom and 12th Floor
Adam Curry: New York, NY 10018
Attention: President
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With an additional copy Kirkpatrick & Lockhart LLP
by like means to: 1800 Massachusetts Ave., N.W.
Washington, D.C. 20036
Attn: John B. Spirtos
(b) To the Employee: Mr. Scott Mednick
7972 Mulholland Drive
Los Angeles, California 90046
With an additional copy
by like means to: Riordan & McKinzie
California Plaza
300 South Grand Ave.
29th Floor
Los Angeles, California 90071
Attn: Jeffrey L. Glassman
and/or to such other persons and addresses as any party hereto shall have
specified in writing to the other.
23. ASSIGNABILITY. This Agreement shall not be assignable by Mednick
but shall be binding upon and shall inure to the benefit of his heirs,
executors, administrators and legal representatives. This Agreement shall be
assignable by THINK to any affiliate, subsidiary or division thereof and to any
successor in interest; provided, however, such assignment shall not relieve
THINK of any of its obligations hereunder.
24. WAIVER AND FURTHER AGREEMENT. Any waiver of any breach of any terms
or conditions of this Agreement shall not operate as a waiver of any other
breach of such terms or conditions as any other term or condition hereof, nor
shall any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision hereof. Each of the Parties hereto agrees to
execute all such further instruments and documents and to take all such further
action as the other party may reasonably require in order to effectuate the
terms and purposes of this Agreement.
25. HEADINGS OF NO EFFECT. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written with the intent that it be
effective as of the Effective Date.
THINK NEW IDEAS, INC.
By: /s/ RONALD E. BLOOM
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Name: RONALD E. BLOOM
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Its: CHIEF EXECUTIVE OFFICER
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/s/ SCOTT A. MEDNICK
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Scott A. Mednick
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As to Section 5 only: /s/ RONALD E. BLOOM
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Ronald Bloom
/s/ ADAM CURRY
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Adam Curry
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