Settlement Agreement - THINK New Ideas Inc., Scott A. Mednick and X-ceed Inc.
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Agreement") is entered into this 24 day of
July, 1998, by and between: (i) THINK NEW IDEAS, INC., a Delaware corporation
("THINK") and SCOTT A. MEDNICK ("Mednick") (each, a "Party" and collectively,
the "Parties") and (ii) X-CEED, INC., a New York corporation ("X-ceed") as to
Section 7(b) and Section 9 only.
RECITALS:
WHEREAS, THINK and Mednick are parties to a certain Settlement Agreement,
effective May 15, 1998 (the "Settlement Agreement");
WHEREAS, each of the Parties has alleged that the other Party has breached
certain provisions of the Settlement Agreement, and THINK also has alleged that
X-ceed may have assisted Mednick in wrongful conduct;
WHEREAS, each Party disputes any and all allegations that such Party has
breached the provisions of the Settlement Agreement, and X-ceed denies that it
has engaged in wrongful conduct;
WHEREAS, each Party hereto desires to resolve the matters in dispute under
the Settlement Agreement upon mutually acceptable terms;
WHEREAS, the Parties have therefore determined to amend the terms of the
Settlement Agreement pursuant to the terms and conditions hereinafter set forth;
and
WHEREAS, THINK and Mednick have agreed not to pursue the legal remedies
otherwise available to them in exchange for Mednick's and THINK's agreement to
enter into, be bound by and to perform in accordance with the provisions hereof.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements set forth herein and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
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Parties and X-ceed (as to Section 7(b) and Section 9 only), each intending to be
legally bound, hereby agree as follows:
1. PAYMENT UNDER SETTLEMENT AGREEMENT; HEALTH INSURANCE. From and after
the date hereof, Mednick shall not be entitled to receive any further payment
from THINK under Section 2(a) of the Settlement Agreement or otherwise and THINK
shall have no further obligation of any kind whatsoever to make any further
payment to Mednick pursuant thereto. Further, Mednick's right to participate in
THINK's health insurance program under Section 2(b) of the Settlement Agreement
shall terminate on July 24, 1999.
2. PRESS RELEASE. Mednick shall cause X-ceed, within one (1) business day
of the date hereof, to issue the press release attached hereto as Exhibit A.
Such press release shall be distributed to and through the same network of
distribution which that certain press release issued by X-ceed on July 20, 1998
(the "X-ceed Press Release") was distributed. Mednick hereby represents that
attached hereto as Exhibit B is a complete and accurate list of the network
participants to and through which the X-ceed Press Release was distributed.
Mednick shall provide, or cause X-ceed to provide, upon distribution of the new
press release, written confirmation that the new press release has been
distributed as required herein.
3. REGISTRATION OF STOCK OPTIONS; VESTING OF STOCK OPTIONS.
(a) REGISTRATION. Section 7(b) of the Settlement Agreement shall be
hereby amended to provide that THINK shall cause the 20,000 shares of common
stock of THINK (the "THINK Common Stock") underlying the options issued to
Mednick as a director of THINK (the "Director Options") to be included in any
registration statement (a "Registration Statement") filed on its behalf under
the Securities Act of 1933, as amended, relating to the offer and sale by it of
any of its securities solely for cash (other than on Form S-4 or any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale by Mednick of the Common
Stock underlying the Director Options). THINK shall use its best efforts to file
the Registration Statement as soon as practicable after the date hereof. In
addition, THINK shall use its best efforts to use Form S-8 to fulfill its
obligations hereunder and shall attempt to do so prior to the filing of a
Registration Statement relating to an underwritten offering. The Parties
acknowledge that in the event that the Registration Statement relates to an
underwritten offering, the underwriter may limit the number of shares of such
THINK Common Stock then owned by Mednick to be included in the Registration
Statement. THINK represents that no shareholder of THINK Common Stock will be
allowed to sell securities in said Registration Statement if Mednick is
precluded from including his securities in said Registration Statement as a
result of such underwriter's decision to limit the number of shares of such
THINK Common Stock then owned by Mednick to be included in such offering.
Further, in the event Mednick is excluded from participating in the foregoing
offering, THINK will file a Registration Statement relating to the THINK Common
Stock underlying the Director Options within six months of the effectiveness of
the Registration Statement from which Mednick's securities were excluded. In the
event that the foregoing offering is terminated, THINK will file a Registration
Statement relating to the THINK Common Stock underlying the Director Options
within sixty days of said termination.
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(b) VESTING. THINK hereby acknowledges that Section 7(b) of the
Settlement Agreement remains in full force and Mednick may exercise the Eighty
Thousand (80,000) options that were granted to him under the 1997 Stock Option
Plan.
4. TERMINATION OF RIGHTS AGREEMENT. Mednick hereby acknowledges that,
pursuant the terms of the Settlement Agreement, Mednick was provided with the
opportunity, in accordance with a certain rights agreement, effective as of May
15, 1998 (the "Rights Agreement"), to include the securities of THINK owned by
him in a Registration Statement and declined such inclusion in writing.
Therefore, it is hereby agreed that the Rights Agreement shall be terminated as
of the date hereof, that THINK shall have no further obligation to Mednick
whatsoever thereunder and that all references thereto in the Settlement
Agreement shall be deleted.
5. TERMINATION OF NON-COMPETE PROVISION; DURATION OF SECTION 6(b).
Section 6(a) of the Settlement Agreement containing the non-compete provision
shall be hereby terminated. Section 6(b) of the Settlement Agreement shall
terminate on December 31, 1998.
6. TERMINATION OF CONSULTING AGREEMENT. It is hereby agreed that the
consulting agreement, effective May, 15, 1998, between Mednick and THINK (the
"Consulting Agreement") which was entered into in accordance with the Settlement
Agreement shall be terminated as of the date hereof and Section 15 of the
Settlement Agreement and all references to the Consulting Agreement set forth
therein shall be hereby deleted.
7. MUTUAL RELEASE AND WAIVER.
(a) PARTIES MUTUAL RELEASE AND WAIVER. Except as provided for in
Section 9, 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) 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. 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. Mednick and THINK further agree 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, neither Party will seek or accept any personal relief
in such civil action, suit or legal proceeding. Further, the Parties do hereby
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."
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and any and all provisions, rights and benefits of any similar state, federal,
or other law, rule or regulation or the common law.
(b) X-CEED AND THINK MUTUAL RELEASE AND WAIVER. Except as provided for
in Section 9, THINK and X-ceed release and waive any and all claims they may
have against each other, its parents, subsidiaries, affiliates, predecessors and
assigns, past or present, and each of them and its and their officers,
directors, agents, servants and employees, 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. 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, or whether they arise directly or
indirectly as a result of Mednick's activities. THINK and X-ceed each 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 with
regard to the matters described herein, neither will seek or accept any personal
relief in such civil action, suit or legal proceeding. Further, THINK and X-ceed
do hereby 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.
8. FINAL SETTLEMENT. The Parties hereby agree that this Agreement is in
compromise and final settlement between 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.
9. RETENTION OF CERTAIN CLAIMS. The Parties and X-ceed expressly
acknowledge that this Agreement is in the nature of a settlement of claims and
counterclaims which each either has or had against the other for legal and
equitable relief. The Parties and X-ceed 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 and the Settlement
Agreement, as amended hereby.
10. NON-DISPARAGEMENT. The Parties represent, agree, covenant and promise
that they will refrain from disparaging each other in connection with Mednick's
departure, the Settlement Agreement and this Agreement.
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11. CONFIDENTIALITY. Section 14(b) of the Settlement Agreement is hereby
renumbered Section 14(d) and Section 14(a) and Section 14(a)(i) of the
Settlement Agreement shall be hereby deleted and the following provisions shall
replace such deleted provisions from the date hereof:
(A) ACKNOWLEDGMENT. The parties recognize that: (i) it is fundamental
to the business and operation of THINK to preserve the confidential information
(defined below) of THINK; and (ii) the disclosure of any of such confidential
information to a competitor of think would be beneficial to such competitors and
detrimental to THINK, by reason of his being an employee of THINK, in the course
of his employment, Mednick had access to, and obtained confidential information.
Therefore, except as provided below, for a period of one (1) year from July 24,
1998, Mednick hereby agrees that he shall keep secret and retain in strict
confidence, and shall not use, disclose to others, or publish any confidential
information.
(b) CONFIDENTIAL INFORMATION DEFINED. For purposes of this Agreement,
this term Confidential Information shall mean:
(i) trade secrets concerning (A) technologies used
in the business of THINK, including such items as product specifications,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, and inventions, (B) information system technologies
used in the business of THINK, including such items as computer software and
programs (including object code and source code), computer software and database
technologies, systems, structures and architectures (and related processes,
formulae, composition, improvements, devices, know-how, inventions, designs,
methods and information); and
(ii) historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, price lists, market studies, written business plans, customer
lists and personnel training materials.
(c) NON-CONFIDENTIAL INFORMATION. Confidential Information shall not
include information that:
(i) is or becomes part of the public domain through
no fault or breach on the part of Mednick;
(ii) is subsequently rightfully obtained by
Mednick from a third party who has the legal right to disclose it, without an
obligation to keep such information confidential;
(iii) is approved for public release by THINK; or
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(iv) is required to be disclosed by judicial action
provided that Mednick has first given THINK reasonable notice of such
requirement and reasonably cooperates with THINK in seeking confidential
treatment for any such disclosure.
12. JOINT PREPARATION. This Agreement was jointly prepared 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.
13. 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.
14. REPRESENTATIONS OF PARTIES. IN EXECUTING THIS AGREEMENT, THE
PARTIES HEREBY REPRESENT THAT:
(a) THEY HAVE COMPLETELY AND CAREFULLY READ THIS AGREEMENT;
(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 ACKNOWLEDGES IS ADEQUATE AND
SATISFACTORY TO EACH PARTY;
(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.
15. 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.
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16. 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.
17. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement between of the Parties 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.
18. 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.
45 West 36th Street
12th Floor
New York, NY 10018
Attention: President
With an additional copy
by like means to: Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., N.W.
Washington, D.C. 20036
Attn: Lawrence Coe Lanpher
(b) To the Mednick: 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
(c) To X-ceed: X-ceed, Inc.
488 Madison Avenue
3rd Floor
New York, New York 10022
Attention: President
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and/or to such other persons and addresses as any party hereto shall have
specified in writing to the other.
19. 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.
20. 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 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.
21. 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 have executed this Agreement as of
the date first above written.
THINK NEW IDEAS, INC.
By: /s/ Ronald Bloom
----------------------------
Name: RONALD BLOOM
Its: CHIEF EXECUTIVE OFFICER
/s/ Scott Mednick
----------------------------
Scott A. Mednick
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As to Section 7(b) and Section 9 only:
X-CEED, INC.
By: /s/ Werner Haase
----------------------------
Name: WERNER HAASE
Its: CHIEF EXECUTIVE OFFICER
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EXHIBIT A
PRESS RELEASE
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[X-ceed Letterhead]
Scott Mednick, Chairman of X-ceed, issued the following statement:
"On May 15, 1998, I left THINK New Ideas, Inc., a company that I helped to
found. Leaving was a difficult decision. However, at that time it was my desire
to pursue more fully my many charitable endeavors. My duties at THINK and my
day-to-day involvement in the business precluded me from pursuing that goal."
"Very recently, I was presented with a challenging opportunity to consider
joining X-ceed. This was a new opportunity - one that I had not considered until
well after I left THINK. I decided to accept this wonderful opportunity. Of
course, I will devote time to charitable endeavors."
"I look forward to being a part of X-ceed and its exciting future. I look
forward as well to the future potential to work with THINK, particularly the
possibility of using some of its state of the art technologies such as E corp.,
Moat, and Web Mechanic. I am enthusiastic about the incredible future of
interactive communications and look forward to the tremendous opportunity at
X-ceed as well as exploring a continuation of a relationship with THINK."
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EXHIBIT B
PRESS RELEASE DISTRIBUTION LIST
New York Times, Wall Street Journal, Silicon Alley Reporter, @ New York,
Business 2.0, CNN fn., Dow Jones business wire, Associated Press, Reuters.