EXHIBIT 10.18
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement"), effective as of the date
executed by all parties below, is made between SER SOLUTIONS, INC., having a
place of business at 00000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000 ("SER"), and
EPIXTAR CORPORATION ("EPIXTAR CORP."), VOXX CORPORATION ("VOXX"), INNOVATIVE
STRATEGIES, INC. ("IMS") and EPIXTAR MARKETING CORPORATION ("EMC") (collectively
"Epixtar"), each having a place of business at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxx, Xxxxxxx 00000.
WHEREAS, SER and IMS are parties to a software license agreement dated
November 3, 2003 (entitled "SER Solutions, Inc. Standard Terms and Conditions:
Telephony" (Rev. 1.11.03); herein "Software License Agreement"); and
WHEREAS, SER and IMS are parties to a Maintenance Agreement for the SER
Software between SER and IMS dated November 3, 2003 (entitled "SER Solutions,
Inc. Maintenance Terms and Conditions: Telephony," (Rev. 1.11.03) and "SER
Solutions, Inc. Maintenance Service Addendum: Telephony" (Rev. 1.11.03)
collectively "Maintenance Agreement"); and
WHEREAS, on or about March 1, 2004, SER and IMS entered into a
Confession of Judgment Promissory Note ("Promissory Note") in the amount of
$698,641.81; and
WHEREAS, Epixtar failed to pay multiple invoices for maintenance and
support services due under the Maintenance Agreement in an amount of
approximately $117,000; and
WHEREAS, Epixtar failed to make certain installment payments under the
Promissory Note and on March 25, 2005, under the terms of the Promissory Note, a
Confession of Judgment in the amount of $539,756.00 was entered against IMS by
the Fairfax County Circuit Court ("Judgment"); and
WHEREAS, on June 3, 2005, SER terminated the Software License Agreement
and Maintenance Agreement; and
WHEREAS, SER filed a lawsuit against Epixtar in a case styled SER
Solutions, Inc. v. Epixtar, et al., Civ. No. 1:05 CV 674 (E.D. Va.), alleging
copyright infringement, breach of contract, misappropriation of trade secrets in
violation of the Virginia Trade Secrets Act, conversion, and unjust enrichment
(the "Litigation"); and
WHEREAS, SER filed a Motion for a Temporary Restraining Order and
Expedited Discovery in the Litigation, which was heard on June 17, 2005 (the
"TRO"); and
WHEREAS, during the hearing on the Injunction, the Court ruled that SER
is entitled to the requested TRO and ordered that IMS and anyone acting in
active concert or participation with IMS (collectively "Epixtar"): (i) shall, no
later than June 24, 2005 at 5:00 p.m. EDT, make any and all versions or copies
of SER's Software (as defined in the Litigation and TRO) available to SER by
modem access so that any and all SER Software may be immediately disabled by
SER; (ii) are ENJOINED from any use whatsoever of any SER Software after 5:00
p.m. on June 24, 2005 (and shall not reproduce, distribute or transfer any SER
Software prior to June 24, 2005); and (iii) shall, no later than June 30, 2005,
return to SER all versions and copies of the SER Software by returning to SER,
at SER's expense, all hard drives (including those located in the Call Manager
servers and Encore servers), and switches and cards containing any SER Software
(including as applicable in the Call Processors or TSP500s) so that SER would
promptly remove its Software and within seven (7) business days of receipt,
return all such hard drives, switches and cards; and
WHEREAS, SER alleges that Epixtar is indebted to SER in an amount of at
least $706,000, which includes the Judgment, the past due amounts under the
Maintenance Agreement and SER's costs and attorneys fees for filing the
Litigation and the TRO ("Debt Due to SER"); and
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WHEREAS, SER and Epixtar (collectively the "Parties") wish to enter
into a business arrangement to resolve issues in the Litigation, Injunction, and
Judgment, and to reinstate the Software License Agreement and Maintenance
Agreement, pursuant to the terms herein; and
WHEREAS, SER and IMS have conducted business together for many years
and the relationship between the companies has been managed by IMS' former
president Xxxxxxx Xxxxxx; and
WHEREAS, SER believes that for a business relationship to continue and
thrive between SER and Epixtar, that Xx. Xxxxxx must remain SER's contact at
Epixtar and must continue to manage the relationship on behalf of Epixtar; and
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties agree as follows:
1. Epixtar will execute a standard SER Purchase Order no later than
June 23, 2005, in the amount of $3,070,000 ("PO"), pursuant to which Epixtar
will purchase at least 2,000 seats of SER's dialers ("Dialer Seats") based on
the schedule in Paragraph 1(c) below, which include software and hardware as set
forth in Paragraphs 1(a) and 1(b):
a. Software -- Epixtar may purchase either CPS or the CPS
Enterprise Edition ("CPS E(2)"), each of which would include
the latest version of the SER software. CPS does not include
the Contact Studio product.
b. Hardware -- If Epixtar elects to purchase CPS, the included
hardware is comprised of the applicable number of Call
Manager servers and TSP500 dialers configured at 288 seats
at a 2:1 line to agent ratio. If Epixtar elects to purchase
CPS E(2), the included hardware is comprised of the
applicable number of Application Servers, Portfolio Manager
Servers, and TSP500 dialers configured at 384 seats at a 2:1
line to agent ratio.
c. Dialer Seat delivery schedule and price (each row represents
a "Seat Bundle")
Delivery By: Seats Price per Seat
------------ ----- --------------
June '05 200 2500
Sep '05 200 2200
Dec '05 200 1900
March '06 300 1600
June '06 300 1300
Sep '06 400 1000
Dec '06 400 700
2. In addition to spending at least $2,870,000 on purchasing 2,000
Dialer Seats as set forth in Paragraph 1(c), Epixtar will use the remaining
$200,000 of the PO to purchase additional SER products and/or services, such as
installation services, configuration services, spare part kits, and training.
a. SER resells a recording product manufactured by Xxxxxx. In
the event Epixtar wishes to purchase the Xxxxxx recording
product for all Dialer Seats in any Seat Bundle purchased
under the PO, SER will sell such Xxxxxx product at a
per-seat price of $650 for voice recording only and $950 per
seat for voice recording plus Remote Client Monitoring,
Quality Reviewing Module, and screen recording.
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3. Within five (5) days of the execution of the PO, Epixtar shall issue
a press release, announcing that it has entered into an agreement to purchase
2,000 Dialer Seats of SER's outbound dialers ("Press Release"). Epixtar shall
provide a draft of such press release to SER for its review and approval prior
to issuing the press release.
4. The Dialer Seats delivered under this Agreement shall be licensed
under the terms of SER's standard Software License Agreement.
5. Epixtar shall pay for the Dialer Seats in each Seat Bundle as
follows: (i) an initial deposit of 50% of the total amount due for the Dialer
Seats in each Seat Bundle upon scheduling delivery of such Dialer Seats; and
(ii) the remaining 50% within ninety (90) days of the delivery of such Dialer
Seats.
6. No later than June 31, 2005, Epixtar shall pay to SER the sum of
$250,000 ("Initial Deposit") by wire transfer, of which no less than $100,000
shall be paid by wire transfer no later than June 24, 2005. The Initial Deposit
shall be applied toward the 50% deposit due for delivery of the first Seat
Bundle.
7. Epixtar shall execute SER's standard Confession of Judgment
Promissory Note in the amount of $3,423,000, which is comprised of $3,070,000
set forth in the PO and $353,000, which represents the 50% of the Debt Due to
SER that is not being forgiven under this Settlement Agreement, as set forth in
Paragraph 8 below ("New Note"). Epixtar may make prepayments under the New Note
at any time without penalty and all such prepayments shall be applied toward the
amounts due to SER under the PO and any amount of the Debt Due to SER that is
not forgiven under this Settlement Agreement.
8. Upon SER's receipt of the Initial Deposit, the signed PO, the signed
MOF, the fully executed New Note, and Epixtar's issuance of the Press Release
(collectively "Conditions"), and subject to the terms of Paragraph 11 of this
Settlement Agreement, and Epixtar's compliance with the other terms of this
Settlement Agreement, SER will forgive $353,000 (50%) of the Debt Due to SER.
9. In the event Epixtar agrees to replace all of its current outbound
dialer systems that are manufactured by any company other than SER, and agrees
to use SER dialers exclusively for its outbound operations, SER will forgive the
remaining $353,000 of the Debt Due to SER; provided Epixtar issues a press
release no later than June 30, 2005, announcing that it has standardized on SER
as its sole outbound dialer vendor and will replace the seats of its other
vendor(s). Epixtar shall provide a draft of such press release to SER for its
review and approval prior to issuing the press release.
10. No later than June 24, 2005, Epixtar will execute a Maintenance
Order Form to expand the Maintenance Agreement to the new Dialer Seats being
purchased under the PO. Epixtar may select either a three (3) year or five (5)
year initial term under the following prices: (i) three (3) year term - $435.75
per seat; or (ii) five (5) year term - $379.00 per seat.
11. Upon completion of the Conditions, SER will withdraw its Complaint
in the Litigation and will cease all attempts to collect any unpaid portion of
the Judgment; provided, however, that, notwithstanding any other provision of
this Settlement Agreement, in the event Epixtar breaches any term of this
Settlement Agreement or defaults on any payment obligation to SER contemplated
under this Settlement Agreement, SER may, at its election, declare the
Settlement Agreement null and void ab initio, and may resume any and all efforts
to collect the Judgment, reinstate the Litigation, seek the payment of all
unpaid Maintenance Fees, seek payment for all money damages and attorneys fees
(including the entire amount of the Debt Due to SER), and seek any and all
additional remedies or rights that may be available to SER. The Parties agree
that between the signing of this Settlement Agreement and June 30, 2005, each
Party will stay all activities relating to the Judgment, including SER's
attempts to collect the Judgment and Epixtar's attempts to set aside the
Judgment. Additionally, Epixtar agrees that it on or before June 30, 2005, it
will with withdraw papers filed in the Fairfax Circuit Court in an attempt to
set aside the Judgment.
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12. Upon completion of the Conditions, and subject to the terms of
Paragraph 11 of this Settlement Agreement, SER will reinstate the Software
License Agreement and the Maintenance Agreement for the 450 seats that were
licensed thereunder, each effective retroactively to June 3, 2005.
13. Upon completion of the Conditions, and subject to the terms of
Paragraph 11 of this Settlement Agreement, SER, on behalf of itself and its
directors, officers, shareholders and employees (collectively the "SER
Releasors") releases and discharges Epixtar and its directors, officers,
shareholders and employees (the "Epixtar Released Parties") from any and all
claims against any of the Epixtar Released Parties based on or arising out of
claims alleged in the Litigation, Injunction, and Judgment.
14. Epixtar, on behalf of itself and its directors, officers,
shareholders and employees (collectively the "Epixtar Releasors") hereby
releases and forever discharges SER and its directors, officers, shareholders
and employees (the "SER Released Parties") from any and all claims against any
of the SER Released Parties based on or arising out of claims alleged in the
Litigation, Injunction, and Judgment.
15. No later than June 30, 2005, SER and Epixtar shall submit to the
United States District Court for the Eastern District of Virginia a joint
Consent Order dismissing without prejudice the Litigation. The Parties agree
that the Court shall retain jurisdiction to enforce the terms of this Settlement
Agreement.
16. Epixtar shall ensure that Xx. Xxxxxx shall remain SER's primary
contact at Epixtar and have continued responsibility to manage the ongoing
relationship between the companies during the term of this Settlement Agreement.
17. Except as specifically set forth in this Settlement Agreement, each
Party shall bear its own costs and expenses, including attorneys' fees.
18. Each Party acknowledges that it has reviewed and read this
Settlement Agreement, and it understands the terms of this Settlement Agreement
and the consequences of signing and delivering this Settlement Agreement.
19. Each Party represents and warrants that it has the full power and
is authorized to execute this Settlement Agreement, and each person whose
signature appears on this Settlement Agreement on behalf of such Party has been
duly authorized and has full power and authority to execute this Settlement
Agreement on behalf of such Party.
20. Each Party has had the opportunity to select and confer with
counsel of its choice to review and read this Settlement Agreement, and has
inquired of and discussed with such counsel the consequences of the execution of
this Settlement Agreement and its delivery to the other Parties.
21. Epixtar on behalf of itself and the Epixtar Releasors, warrants and
represents that it has not assigned, transferred, sold or otherwise permitted
any third party to use any of the SER Software. The Parties represent that they
have not assigned, transferred, or otherwise alienated the potential claims or
demands that relate to the Litigation.
22. This Settlement Agreement may be executed in any number of
counterparts and any Party hereto may execute any such counterpart each of which
when executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
23. This Agreement and any Exhibits hereto represent the complete and
exclusive statement of the terms of their agreement with respect to the subject
matter hereof and supersedes all prior communications, offers, agreements,
understandings, or representations of any kind or character, whether written or
oral, related to such subject matter. Any unwritten terms, covenants,
conditions, or representations, if any, that may have been made are agreed to be
immaterial, and none of them were relied upon by any Party in entering into this
Agreement.
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24. All notices, requests or other communications in connection with or
relating to this Agreement must be in writing and sent by (a) certified mail,
with return receipt requested, (b) Federal Express or other overnight service or
(c) by facsimile and regular mail. A notice shall be deemed to have been
delivered on the date that it was sent.
Notices shall be sent to the following addresses:
SER SOLUTIONS, INC. EPIXTAR CORPORATION, IMS, VOXX and EMC
c/o Xxxxxxx X. Xxxxxxx, III Xxxx Xxxxxxxx, Xxxxxx X. Xxxxxxxxx
Xxxxxxx & Xxxxxx LLP General Counsel
0000 X Xxxxxx, X.X. Epixtar Corporation
Washington, D.C. 20006 00000 Xxxxxxxx Xxxxxxxxx
Phone: (000) 000-0000 Xxxxx 000
Fax: (000) 000-0000 Xxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
With copy to With a copy to:
SER Solutions, Inc. Xxxxxxx Xxxxxx
c/o General Counsel EPIXTAR MARKETING CORP.
00000 Xxxxxxxx Xxxxxx 00000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000 Xxxxx 000
Xxxxx, Xxxxxxx 00000
The Parties may, by written notice, designate a different address for notices,
requests or other communications or different or additional persons to be
notified or to receive requests or other communications.
25. No modification, amendment or waiver of any of the terms or
provisions of this Agreement shall bind the Parties unless such modification,
amendment or waiver is in writing and has been executed by a duly authorized
representative of the entity against whom such modification, amendment or waiver
is sought to be enforced. No delay or omission by either Party in exercising any
right or power occurring upon any noncompliance or default by the other with
respect to any of the terms and provisions of this Agreement will impair any
such right or power or be construed to be a waiver thereof. A waiver by any of
the Parties of any of the covenants, conditions or agreements to be performed by
the other will not be construed to be a waiver by that Party of any succeeding
breach thereof or of any other covenant, condition or agreement contained in
this Agreement.
26. This Settlement Agreement and any disputes regarding its
interpretation or enforcement shall be governed by the law of the Commonwealth
of Virginia, without regard to its choice of law provisions, and any litigation
relating to or arising from this Agreement may only be brought in the state or
federal courts of the Commonwealth of Virginia, and the Parties agree to be
bound by the jurisdiction of such courts.
27. This Agreement is a negotiated document prepared by one party as a
matter of convenience. In the event of any dispute between the parties, neither
party shall assert that the provisions of this Agreement should be construed
against or in favor of either party solely as a consequence of such party's
preparation, or lack of preparation, of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Settlement
Agreement intending to be fully bound by its terms, effective this __th day of
June 2005.
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EPIXTAR CORPORATION
By: ______________________________________ DATE: June __, 2005
Title: ___________________________________
INNOVATIVE MARKETING STRATEGIES, INC.
By: ______________________________________ DATE: June __, 2005
Title: ___________________________________
VOXX CORPORATION
By: ______________________________________ DATE: June __, 2005
Title: ___________________________________
EPIXTAR MARKETING CORP.
By: ______________________________________ DATE: June ___, 2005
Title: ___________________________________
SER SOLUTIONS, INC.
By: ______________________________________ DATE: June ___, 2005
Title: ___________________________________
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