SETTLEMENT AGREEMENT AND RELEASE
SETTLEMENT
AGREEMENT AND RELEASE
Captive
Audience, LLC, and its past, present and future officers, directors, members,
parents, subsidiaries, affiliates, predecessors in interest and employees
(hereinafter “Captive”) and PSI, Inc. (formerly known as Friendlyway, Inc.), and
its past, present and future officers, directors, members, parents,
subsidiaries, affiliates, predecessors in interest and employees (hereinafter
“PSI”) have reached the following agreement as of November 13, 2006 (the
“Settlement Agreement”).
WHEREAS,
Captive
and PSI are parties to a certain Asset Purchase Agreement (as amended by
an
addendum, dated July 31, 2006, and a rider, dated August 10, 2006) (hereinafter
the “APA”) dated March 18, 2006, pursuant to which, on [August 22, 2006], PSI
purchased from Captive the digital signage assets and contract rights described
on the schedules attached to the APA (the “Acquired Assets”) for a purchase
price of $2.4 million, consisting of (i) cash in the amount of $1.1 million
payable in accordance with a payment schedule attached to the APA and (ii)
5,909,091 shares of common stock of PSI having an agreed value of $1.3 million
(the “Acquisition Shares”);
WHEREAS,
in
connection with the purchase of the Acquired Assets, PSI made partial purchase
price payments to Captive in the aggregate amount of $195,000 and other partial
payments (the “Partial Payments”);
WHEREAS,
certain
disputes have arisen between the parties relating to Captive’s sale, assignment
and transfer of the Acquired Assets and PSI’s payment of the purchase price
therefor;
WHEREAS,
on or
about October 18, 2006, Captive advised PSI that it intended to commence
a
lawsuit against the PSI and/or its affiliates, Pantel Systems, Inc. and Ignition
Media Group, Inc. (collectively with PSI, the “Purchaser Parties”), in the
United States District Court, District of New Jersey, seeking, among other
relief, a permanent injunction to prevent the Purchaser Parties from impairing
Captive’s use of the Acquired Assets as well as damages based on allegations
that the Purchaser Parties breached obligations owing to Captive under the
APA;
WHEREAS,
the
action is currently pending under the caption Captive Audience, LLC x. Xxxxxx
Systems, Inc. a/k/a Friendlyway, Inc. and Ignition Media Group, Inc., Civil
Action No. 06-5020 (JAG) (the “Action”);
WHEREAS,
the
parties now wish to rescind the transactions contemplated by the APA and
settle
this matter by resolving their differences amicably according to the conditions
set forth herein.
NOW,
THEREFORE,
in
consideration of the following covenants and agreements and for other good
and
valuable consideration, the receipt of which is hereby acknowledged, the
parties
have agreed as follows:
1. Upon
the
execution of this Settlement Agreement, PSI shall pay to Greenbaum, Rowe,
Xxxxx
& Xxxxx LLP, as attorneys for Captive by either check from an attorney trust
account or by wire transfer of immediately available funds, the amount of
$90,000.00 (Ninety Thousand United States Dollars (the “Settlement Sum”).
Effective upon receipt of the Settlement Sum, the purchase and sale of the
Acquired Assets pursuant to the APA shall be deemed rescinded, terminated,
cancelled and null and void ab
initio,
and the
APA and all ancillary agreements executed in connection therewith or
contemplated thereby (collectively with the APA, the “Transaction Documents”)
shall be deemed rescinded, terminated, cancelled and null and void ab
initio.
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2. Captive
hereby agrees, for itself and on behalf of each of its members, that it
relinquishes all right, title and interest in and to the Acquisition Shares.
Likewise, PSI hereby agrees that it relinquishes all right, title and interest
in and to any and all contracts, assignments and/or any assets of any kind
whether or not included in the Acquired Assets that had anything to do with
the
purchase of assets from Captive. Captive hereby agrees to assume, pay and
discharge any and all liabilities or obligations, regardless of when same
shall
have accrued, under such contracts and does hereby further agree to indemnify,
defend and hold each Purchaser Party harmless from any losses, liabilities,
costs, suits, judgments, claims or damages, which any Purchaser Party may
suffer
or incur in connection with any such contract. The parties further agree
that
Captive shall be entitled to retain the Partial Payments and that certain
digital signage equipment of PSI currently in Captive’s possession or otherwise
under its control, which equipment consists of five installed 42-inch LCD
video
screens and five 42-inch uninstalled LCD video screens.
3. Upon
receipt of the payment referred to in this Settlement Agreement, Captive
shall
immediately withdraw and dismiss the Action with prejudice and immediately
deliver to PSI the original executed promissory note, dated August 21, 2006
(the
“Promissory Note”), included in the Transaction Documents, which Promissory Note
shall have been prominently marked “Cancelled” by an authorized officer of
Captive.
4. Captive,
on behalf of its members, partners, shareholders, officers, directors,
successors and assigns, hereby fully and forever releases and discharges
each of
the Purchaser Parties and all of their respective representatives, agents,
attorneys, consultants, shareholders, officers, directors, employees, parents,
subsidiaries, affiliates, successors and assigns from any and all claims,
demands, losses, costs, damages, rights and causes of action, debts, liabilities
and obligations whatsoever, at law or in equity, which Captive ever had,
now has
or may have against them with respect to the claims that were asserted or
could
have been asserted in the Action or that arose out of the Transaction Documents
from the beginning of the world to the date hereof.
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5. PSI,
on
behalf of itself and the other Purchaser Parties, and their respective
successors and assigns, hereby fully and forever releases and discharges
Captive
and all of its members, shareholders, officers, directors, successors and
assigns from any and all claims, demands, losses, costs, damages, rights
and
causes of action, debts, liabilities and obligations whatsoever, at law or
in
equity, which any Purchaser Party ever had, now have or may have against
them
with respect to the claims that were asserted or could have been asserted
in the
Action or that arose out of the Transaction Documents from the beginning
of the
world to the date hereof.
6. Captive
states to the best of its knowledge that other than the claims asserted against
the Purchaser Parties in the Action, it is not aware of the existence of
any
other claims against any Purchaser Party. PSI states to the best of its
knowledge that is not aware of the existence of any claims of any Purchaser
Party or of any third party that may have claims against Captive.
7. Captive
does hereby agree to indemnify, defend and hold harmless PSI, its officers,
directors and employees, from any and all claims presently asserted or which
may
hereinafter be asserted by any person or entity, including but not limited
to,
the New Jersey Department of Labor, the United States Department of Labor,
any
present or former employee of Captive (each a “Captive Employee”) or any former
employee of PSI who may become an employee of PSI in connection with the
transactions contemplated under the APA (a “Transferred Employee”) (with the
exception of Xxxxx XxXxxx, Xxxx Xxxxxxx and Xxxx Xxxxx) relating to either
Captive’s or PSI’s alleged failure to pay wages to any such Captive Employee or
Transferred Employee (hereinafter a “Wage Claim”). This indemnity and agreement
to hold PSI harmless includes but is not limited to, the costs of professional
fees, including legal, accounting, expert and related fees and costs which
may
be incurred by PSI in the event PSI must institute a suit to enforce this
indemnity and/or in the event PSI must defend against any such claims because
Captive has refused to do so. If a claim is asserted against PSI that falls
within the indemnification contained in this paragraph, PSI will submit the
claim to Captive and request that Captive indemnify and defend PSI in accordance
with this paragraph.
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8. PSI
agrees that in connection with the indemnity set forth above, PSI shall be
responsible for the first $1750.00 (One Thousand Seven Hundred and Fifty
United
States Dollars), in the event that liability is assessed against Captive
and/or
PSI in connection with a Wage Claim. PSI’s liability to make such payment shall
only arise in the event that, after diligent investigation and defense by
Captive, it is determined that liability exists, or after diligent defense
of
such claim by Captive, liability is assessed against Captive and/or PSI.
In no
event shall PSI’s aggregate liability exceed $1750.00 (One Thousand Seven
Hundred and Fifty United States Dollars), irrespective of the amount and/or
number of Wage Claims that are asserted against Captive and/or PSI as a
consequence of the APA and the Transaction Documents. In no event shall PSI
have
any liability whatsoever for any Wage Claim asserted by any Captive Employee
or
Transferred Employee with respect to any compensation after October 9, 2006.
9. All
parties shall bear their own respective costs including, but not limited
to,
attorneys fees, court costs, arbitration fees, litigation expenses, and
investigation expenses, incurred by such party on or prior to the date of
this
Agreement or in relation to a party’s performance hereof.
10. Each
party agrees to keep confidential, and not disclose or make use of any
information contained in this Agreement including, without limitation, the
existence of this Agreement (the “Confidential Information”), without the prior
consent of all other parties hereto. To the extent that legal counsel to
any
party advises that disclosure of any Confidential Information by such party
is
required by law or in any legal proceeding, governmental investigation, or
other
similar proceeding, such party shall provide sufficient prior notice to all
other parties to allow the other parties to seek a protective order or such
other relief to prevent such disclosure. Notwithstanding anything to the
contrary in this Section 8, in connection with PSI’s reporting obligations under
the Securities Exchange Act of 1934, as amended, PSI may, without the prior
consent of Captive, disclose any Confidential Information in its public
securities filings, including the public filing of a copy of this Settlement
Agreement, if so advised by legal counsel to PSI.
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11. No
party
hereto admits liability of any kind.
12. In
the
event of a claimed breach of any of the provisions of this Settlement Agreement,
the party claiming breach shall notify the alleged breaching party (or parties)
in writing (in accordance with the notice provisions hereof) of the claimed
breach and the alleged breaching party (or parties) shall have five business
days to cure said breach, if curable.
13. Each
party agrees to take any and all steps, including without limitation, the
execution of instruments, assignments, powers or other documentation, which
may
be reasonably requested by any other party hereto in order to carry out the
intent of this Settlement Agreement.
14. All
notices, waivers and other communications hereunder shall be in writing and
shall be give by hand delivery to the other party, by reputable overnight
courier, or by certified mail, return receipt requested. All notices, waivers,
or other communications shall be deemed delivered when actually received
if
delivered by hand, one day after mailing if sent by overnight courier and
three
days after mailing if sent by certified mail and shall be addressed as
follows:
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If
to
Captive:
Captive
Audience, LLC
0
Xxxxxx
Xxxxx
Xxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxx Xxxxxx, Chairman
With
a
copy to:
Xxxx
X.
Xxxxx, Esq.
Greenbaum,
Rowe, Xxxxx & Xxxxx LLP
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
If
to any
PSI:
PSI,
Inc.
0000
Xxxxxxxx Xxxxxx Xxxxx
Xxxxx
000
Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
With
a
copy to:
Xxxxxx
X.
Xxxxxxxxx, Esq.
Xxxxx
Xxxxxxx Xxxxxxx & Xxxxx LLP
000
Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
15. This
Agreement may be signed in counterparts and when executed by all parties
shall
constitute one integrated agreement. A party’s signature delivered by facsimile
transmission shall be deemed an original and is binding on such
party.
16. Each
of
the signatories hereto represents and warrants to be duly authorized to fully
and completely resolve the disputes described in this Settlement Agreement,
make
the release and indemnities contained in this Settlement Agreement, and to
bind
the party on whose behalf the signatory has agreed to act to the terms and
conditions contained in this Settlement Agreement.
17. The
parties hereto represent and warrant that they have not assigned, transferred,
conveyed or released and discharged, voluntarily or involuntarily, or by
operation of law, to any other entity an interest in the disputes which are
the
subject of this Settlement Agreement.
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18. This
Settlement Agreement represents the entire agreement concerning the matters
herein, supersedes any and all prior agreements concerning same, may not
be
amended except in a writing referring specifically to this Agreement, and
shall
be binding on the parties’ successors and assigns.
19. The
parties each acknowledge that they have not executed this Agreement in reliance
on any representation, inducement, promise, agreement or warranty which is
not
contained or referenced in this Agreement and that they have made such
independent investigation of the facts pertaining to the claims and this
Agreement, and of all matters pertaining to it, as it deems necessary, and
that
they are relying solely upon their own investigation of the facts and are
not
relying in any way (and acknowledges that it would be unreasonable to so
rely)
upon any statement, silence, act or omission of any other party in entering
into
this Settlement Agreement other than those representations specifically set
forth in writing herein.
20. This
Agreement shall be construed and interpreted in accordance with the laws
of the
State of New Jersey without regard to any conflicts of law.
21. The
United States District Court for the District of New Jersey retains jurisdiction
over the performance and enforcement of this Settlement Agreement and
Release.
| CAPTIVE AUDIENCE, LLC | ||
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| By: | /s/ Xxxx Xxxxxx | |
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Name:
Xxxx Xxxxxx
Title:
Chairman
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| By: | /s/ Xxxx Xxxxxx | |
|
Name:
Xxxx Xxxxxx
Title:
Member
|
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OTHER
MEMBERS
PSI, INC.
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| By: | /s/ Xxx Xxxxxxx | |
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Name:
Xxx Xxxxxxx
Title:
Chief Executive Officer
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