EXHIBIT (10nn)
SETTLEMENT AGREEMENT
This Settlement Agreement is made as of November 25, 1997, by and
between the parties (the "Parties") listed below.
Parties:
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1. Sandbox Entertainment Corporation, a Delaware corporation
("Sandbox").
2. Xxxxxxx X. Xxxxx and Xxxxx Corp., an Arizona corporation
(collectively "Kolbe").
Recitals:
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1. Kolbe are parties to litigation entitled Xxxxxxx X. Xxxxx, et. al.
v. Xxxx X. Xxxxx, et. al., No. CIV 95-1861 PHX RCB, pending in the United States
District Court for the District of Arizona ("the Litigation"). Kolbe have
threatened to add Sandbox as a defendant in the Litigation and have prepared a
draft of a proposed First Amended Complaint which names Sandbox as a defendant,
a copy of which is attached hereto as Exhibit A.
2. The Parties now desire to resolve and settle the claims Kolbe have
threatened to assert against Sandbox in the Litigation, to avoid the expense,
inconvenience and distraction of litigation, to compromise and resolve their
claims and differences, and to effect a release of the claims Kolbe have
threatened to assert against Sandbox.
Agreement:
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1. Upon the execution of this Settlement Agreement, Sandbox shall
execute and deliver to Kolbe a promissory note in form attached hereto as
Exhibit B (the "Promissory Note").
2. Unless and until Sandbox defaults upon the Promissory Note according
to its terms, Kolbe shall take no efforts to add Sandbox as a defendant to the
Litigation, nor shall Kolbe assert claims or institute litigation against
Sandbox arising out of or relating to the events, occurrences,
transactions, actions, claims, or causes of action which are the subject of the
Litigation or of the proposed First Amended Complaint.
3. For good and valuable consideration, receipt of which is hereby
acknowledged, Kolbe release and discharge Sandbox, its officers, directors,
shareholders, agents, employees, attorneys, successors and assigns from any and
all claims or causes of action, in law or in equity, demands, liabilities,
losses, damages, costs, expenses, compensation, and all other damages and
liabilities of any kind or nature whatsoever, direct or indirect, whether or not
now known, suspected, or claimed, that Kolbe ever had, now has, or may have in
the future because of any matter, act, occurrence, or transaction occurring at
any time prior to the execution of this Settlement Agreement and which arises
out of or relate to the events, occurrences, transactions, and actions which are
the subject of the Litigation or of the proposed First Amended Complaint. This
release shall become effective immediately upon (but not before) payment in full
of all sums then owed to Kolbe pursuant to the Promissory Note, whether before
or after the due date thereof.
4. The Parties agree that (a) neither this Settlement Agreement nor any
act under it constitutes nor shall be construed to constitute an admission of
liability or fault of any kind by Sandbox or any representative thereof, and (b)
this Settlement Agreement is made solely to terminate the disputes between the
Parties and to avoid the future expense and distraction of litigation.
5. Kolbe represent and warrant that they have not heretofore assigned
or transferred, or otherwise conveyed, and will not assign, transfer, or
otherwise convey any claim or cause of action which is a subject of the release
contained in Paragraph 3 of this Settlement Agreement.
6. This Settlement Agreement and the Promissory Note contain the entire
understanding and agreement of the Parties with respect to their subject matter
and supersede any and all prior negotiations and agreements as to the subject
matter. No change or modification to this Settlement
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Agreement or the Promissory Note will be effective unless contained in a writing
signed by the Party against whom enforcement of such change or modification is
sought.
7. Each Party represents and warrants that it has the full capacity and
authority to enter into, execute, deliver, and perform this Settlement Agreement
and that this Settlement Agreement constitutes an agreement binding upon, and
enforceable against, that Party.
8. By executing this Settlement Agreement, each Party acknowledges that
it has received the advice of legal counsel of its own selection concerning this
Settlement Agreement and that such Party executes this Settlement Agreement with
full knowledge and understanding of its terms and conditions after consultation
with such legal counsel.
9. This Settlement Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona. The Parties agree that each
participated in the preparation of this Settlement Agreement and, in the event
of any claim arising from a breach of this Settlement Agreement, its language
shall not be construed against or in favor of any Party.
10. This Settlement Agreement shall inure to the benefit of and be
binding upon the Parties and their respective successors and assigns.
11. The Parties hereby agree to execute and deliver any further
documents and to perform any further acts that may be reasonably necessary to
carry out the purpose and intent of this Settlement Agreement.
12. This Settlement Agreement may be executed in counterparts, and the
Parties agree that each counterpart shall be deemed an original.
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XXXXXXX X. XXXXX
Dated: 11/24/97 /s/ Xxxxxxx X. Xxxxx
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XXXXX CORP.
Dated: 11/24/97 By: /s/ Xxxxx Xxxxx
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Its CEO, Chairman
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SANDBOX ENTERTAINMENT CORPORATION
Dated: 11/25/97 By: /s/ Xxxx Xxxxxxxx
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Its Chief Financial Officer
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EXHIBIT A
Xxxxx X. Xxxxxxx (002385)
Xxxxx X. Xxxxxxxxx (009599)
SACKS TIERNEY PA
0000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Attorneys for Plaintiffs
UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
XXXXXXX X. XXXXX, an Arizona ) No. CIV 95-1861 PHX RCB
resident; and XXXXX CORP., an )
Arizona corporation, ) FIRST AMENDED COMPLAINT
)
Plaintiffs, )
)
vs. )
)
XXXX X. XXXXX; XXXXX & COMPANY, )
LTD.; HUMANAGEMENT, INC.; and )
SANDBOX ENTERTAINMENT )
CORPORATION, )
)
Defendants. )
-----------------------------------
For their First Amended Complaint against the Defendants in
this action, Plaintiffs Xxxxxxx X. Xxxxx and Xxxxx Corp. hereby
allege the following:
JURISDICTION AND VENUE
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THE PARTIES
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9. Defendant Sandbox Entertainment Corporation is a Delaware
corporation with its principal place of business located in Maricopa County,
Arizona.
THE KOLBE ORIGINAL WORKS
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INVOLVEMENT OF DEFENDANTS XXXXX AND XXXXX & CO.
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WITH XXXXX CORP.
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INTELLECTUAL PROPERTY INFRINGEMENT
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MISREPRESENTATIONS IN DEFENDANTS' MATERIAL
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LIABILITY OF SANDBOX ENTERTAINMENT CORPORATION
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71. Defendant Sandbox Entertainment Corporation ("Sandbox") is a
developer of computer software, and the successor in interest to an Arizona
corporation formerly known as Tracer Design, Inc. ("Tracer"). Tracer was merged
into Sandbox on or about April 18, 1996, and therefore no longer has a separate
corporate existence from Sandbox. Accordingly, Sandbox is liable for any acts
committed by Tracer which are the subject of this First Amended Complaint.
72. In 1995, Tracer agreed to place certain software that had been
developed for Xxxxx and his company on certain computer servers owned and
operated by Tracer in Phoenix. This software, the content of which was known to
Tracer, included materials and
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test instruments which closely copy many of the aspects and expressions
contained in the original works of Xx. Xxxxx, and was designed to create and
operate a World Wide Web site on the Internet for the purpose of promoting and
marketing Xxxxx'x ME2 system throughout the United States and all other places
from which the Internet may be accessed (the "ME2 Web Site").
73. Tracer further agreed to design, create and produce an interactive
informational advertisement for the ME2 system, and to place that advertisement
in a computer game which Tracer operated on the Internet known as "Cyberhunt."
74. In late l995 or early 1996, Xxxxx'x ME2 Web Site was placed on
Tracer' computer servers, a process which required Tracer to reprogram the
existing software for that Site in order for it to be operable on Tracer's
computer. In addition, Tracer made certain changes to the graphics on the ME2
Site, as well as its main page. Sandbox made later revisions to the ME2 Site
Software so that it would operate and function more effectively on the Internet,
most notably in June 1996 and February 1997.
75. After it was first placed on Tracer's computer server, the ME2 Web
Site was continuously maintained by Tracer and then Sandbox through and until
approximately June of 1997, resulting in the reproduction, display, distribution
and marketing of the information and materials contained in that Site throughout
the Internet. At all of these times, Tracer and then Sandbox retained
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the right and ability to control and supervise the transmission of the ME2 Web
Site over the Internet. In addition, Sandbox has placed advertisements for the
ME2 Web Site on Sandbox's World Wide Web sites, and has on occasion programmed
"hyperlinks" in those sites which permit persons using the Sandbox sites to
immediately transfer to the ME2 Web Site.
76. As consideration for their services, Tracer and Sandbox have
received payments of money and a computer from Xxxxx. As further consideration,
Sandbox was also promised a percentage of any software products sold from the
ME2 Web Site.
FIRST CAUSE OF ACTION
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(Copyright Infringement)
SECOND CAUSE OF ACTION
----------------------
(Copyright Infringement by Sandbox)
92. The above allegations are incorporated by this reference.
93. Prior to modifying and placing the ME2 Web Site software on its
computer servers, Tracer had knowledge that Xx. Xxxxx had commenced the instant
lawsuit against Xxxxx, and that this lawsuit involved claims of copyright
infringement relating to the ME2 software. Tracer also knew that Xxxxx had
worked for Xx. Xxxxx, and that her business involved furnishing conflict
resolution, team
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building and other services to companies which would assist their employees in
operating better.
94. Xxxxx notified Sandbox that a preliminary injunction had been
issued against him in this action, shortly after that injunction was entered by
the Court on June 7, 1996. Xxxxx also notified Sandbox that the injunction
required that the ME2 Web Site be modified so that further purchases of products
and services from that Site would be temporarily suspended. Upon Xxxxx'x
request, Sandbox made those modifications, but did not delete, remove, redact or
disable various portions of the ME2 Web Site which included testing instruments
and other materials found by the Court to be infringing of Plaintiffs'
copyrights, nor did Sandbox delete, remove, redact or disable any of those
portions of the ME2 Web Site until after Sandbox was notified that contempt
proceedings had been filed against Xxxxx due to his alleged violations of the
preliminary injunction.
95. As a result of its and Tracer's actions, Sandbox has substantially
contributed to the other Defendants' infringement of Plaintiffs' copyrighted
materials, and/or has directly or vicariously infringed those materials by
duplicating, displaying, distributing and marketing them over the Internet.
96. Plaintiffs have been financially harmed and otherwise damaged by
Sandbox's acts of direct, contributory and/or vicarious copyright infringement.
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97. Accordingly, Sandbox is liable for all applicable damages and other
relief permitted by law or equity.
DATED this day of , 1997.
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SACKS TIERNEY P.A.
By:
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Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxx
Attorneys for Plaintiffs
COPY OF THE FOREGOING
MAILED this day
---------
of , 1997, to:
---------------
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
RIDENOUR, SWENSON, XXXXXX & XXXXX
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attorneys for Defendants Xxxx X. Xxxxx
and Humanagement, Inc.
Xxxxx X. Xxxxxxxxx, Esq.
XXXXXX XXXXXXX, P.A.
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attorneys for Defendant Xxxxx & Company, Ltd.
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EXHIBIT B
PROMISSORY NOTE
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$30,000 November___, 1997
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned, Sandbox Entertainment Corporation,
a Delaware corporation with its principal place of business at 0000 X. Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter "Maker"), promises to pay
to the order of Xxxxxxx X. Xxxxx and Xxxxx Corp., an Arizona corporation, or
assigns (collectively "Holder"), at Phoenix, Arizona, or at such other place as
Holder of this Promissory Note shall designate in writing, the principal sum of
Thirty Thousand Dollars ($30,000), without interest. The entire amount of
indebtedness under this Note shall be due and payable on February __, 1998.
Maker shall have the right at any time or from time to time to prepay
all or a portion of this Note without premium or penalty. Any such prepayment
shall not affect the total amount due under this Note or its due date.
If there should be a default in the payment of any amount which is not
paid when due, such amount shall bear interest from the date when due until paid
in full at the rate of eighteen percent (18%) per annum. In the event of default
in the payment of any amount under this Note, Maker promises to pay all
reasonable attorneys' fees and costs incurred by Holder in connection therewith.
This Promissory Note shall be governed by and construed in accordance with the
laws of the State of Arizona.
Failure of Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or in the event of continuance of any existing default after demand for
strict performance hereof.
Maker waives demand, diligence, presentment for payment, protest and
notice of demand, protest, nonpayment and exercise of any option hereunder.
Maker further agrees that the granting without notice of any extension or
extensions of time for payment of any sum or sums due hereunder, or for the
performance of any covenant, condition or agreement hereof, shall in no way
release or discharge the liability of Maker.
Time is of the essence in this Note and each and every term and
provision hereof.
SANDBOX ENTERTAINMENT CORPORATION
By:
Name:
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Its:
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