SETTLEMENT AND MUTUAL RELEASE AGREEMENT
THIS SETTLEMENT AND MUTUAL RELEASE AGREEMENT (the "Agreement") is entered
into this 9th day of December 1996 by and between Xxxxxx Xxxxx, an individual,
Xxxx Xxxxx, an individual, Xxxx Xxxxx, an individual, Xxxx Xxxxx, an individual,
Broadway Partners, a partnership comprised of affiliates of Xxxx and Xxxxxx
Xxxxx, Xxxxxx Xxxx, an individual, and Xxxxxxx Xxxxx, an individual
(collectively the "RCI Parties"), and Incomnet, Inc., a California corporation
("Incomnet"), with respect to the following facts.
R E C I T A L S
A. The RCI Parties purchased convertible promissory notes from the
Company in February 1995, and shares of the Common Stock of the
Company and warrants to purchase shares of the Common Stock from the
Company in July 1995 (collectively, the "Securities").
B. The RCI Parties allege that the Company breached certain covenants and
misled the RCI Parties in connection with the sale of the Securities
to them.
C. The Company may have certain claims (the "Claims") against certain of
the RCI Parties in connection with the purchase by the Company of 51%
of the outstanding Common Stock of Rapid Cast, Inc. in February 1995,
and the sale by the RCI Parties of shares of the Company's Common
Stock in 1995.
D. The Company and the RCI Parties desire to settle all claims among
themselves relating to the Securities and the Claims pursuant to the
terms and conditions of this Agreement.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereby
agree as follows:
1. PURCHASE OF WARRANTS BY THE RCI PARTIES AND REGISTRATION RIGHTS
The RCI Parties agree to purchase and the Company agrees to issue to the
RCI Parties, effective on December 9, 1996, the following numbers of warrants to
purchase the following number of shares of the Common Stock of the Company (the
"Underlying Shares") according to the following schedule, for a purchase price
of $.10 per warrant, payable upon the execution of this Agreement by the
Company:
NAME OF RCI PARTY NUMBER OF WARRANTS NUMBER OF EXERCISE PRICE EXERCISE PERIOD
UNDERLYING
SHARES
Xxxxxx Xxxxx 100,000 100,000 $3.75 12/9/96 - 12/9/99
Xxxx Xxxxx 100,000 100,000 $3.75 12/9/96 - 12/9/99
Xxxx Xxxxx 50,000 50,000 $3.75 12/9/96 - 12/9/99
Xxxx Xxxxx 10,000 10,000 $3.75 12/9/96 - 12/9/99
Xxxxxx Xxxx 10,000 10,000 $3.75 12/9/96 - 12/9/99
Xxxxxxx Xxxxx 50,000 50,000 $3.75 12/9/96 - 12/9/99
Broadway Partners 40,000 40,000 $3.75 12/9/96 - 12/9/99
2. PURCHASE OF STOCK BY CERTAIN RCI PARTIES
The RCI Parties agree to purchase from the Company an aggregate of $100,000
worth of the Company's registered Common stock for a price equal to the last
sale price of the Company's Common Stock as quoted on the NASDAQ Small Capital
Market on the date that this Agreement is executed by the Company and at least
one of the RCI Parties. The purchase price will be payable and the stock will
be issuable upon or as soon as practicable after the execution of this Agreement
by the Company.
3. RELEASE OF CLAIMS
3.1 THE SECURITIES AND THE CLAIMS
Effective on December 9, 1996, each party to this Agreement fully and
forever releases and discharges each other and any of the Company's past,
present and future affiliates, employees, officers, directors, shareholders,
attorneys, accountants, successors and predecessors from any and all claims,
demands, obligations, losses, damages, or causes of action of any nature
relating to the offer or sale of the Securities by the Company to the RCI
Parties, or relating to any of the Claims, whether based in tort, contract or
any other theory of recovery, and whether for compensatory or punitive damages,
that now exist or may hereafter accrue based on actions occurring prior to the
effective date of this release.
3.2 REPRESENTATIONS AND AGREEMENTS
The undersigned agree that these releases shall not be considered
admissions by any party of any liability or wrongdoing. The undersigned warrant
that no promise or inducement has been offered except as herein set forth. The
undersigned are of legal age and legally competent to execute this release and
accept full responsibility therefor. The undersigned declare that the terms of
this full and final release of claims have been completely read by the
undersigned and are fully understood and voluntarily accepted for the purpose of
making a full and final compromise and settlement. The parties hereto hereby
represent and warrant that they have not assigned any of their above referenced
released claims to any third party. The undersigned further agree that all
rights under Section 1542 of the Civil Code of California, and any similar law
of any state or territory of the United States or other jurisdiction, are hereby
expressly waived. Said Section reads as follows:
"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."
4. ASSIGNMENT OF CLAIMS
The RCI Parties hereby assign to the Company all claims of any nature
whatsoever which they may have against Xxx X. Xxxxxxxx. The RCI Parties agree
to execute any additional documents and take any additional action reasonably
requested of them
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by the Company in order to assist the Company in asserting such claims against
Xxx X. Xxxxxxxx.
5. INJUNCTIVE RELIEF
5.1 DAMAGES INADEQUATE
Each party acknowledges that it would be impossible to measure in money the
damages to the other party if there is a failure to comply with any covenants
and provisions of this Agreement, and agrees that in the event of any breach of
any covenant or provision, the other party to this Agreement will not have an
adequate remedy at law.
5.2 INJUNCTIVE RELIEF
It is therefore agreed that the other party to this Agreement who is
entitled to the benefit of the covenants and provisions of this Agreement which
have been breached, in addition to any other rights or remedies which they may
have, shall be entitled to immediate injunctive relief to enforce such covenants
and provisions, and that in the event that any such action or proceeding is
brought in equity to enforce them, the defaulting or breaching party will not
urge a defense that there is an adequate remedy at law.
6. WAIVERS
If any party shall at any time waive any rights hereunder resulting from
any breach by the other party of any of the provisions of this Agreement, such
waiver is not to be construed as a continuing waiver of other breaches of the
same or other provisions of this Agreement. Resort to any remedies referred to
herein shall not be construed as a waiver of any other rights and remedies to
which such party is entitled under this Agreement or otherwise.
7. SUCCESSORS AND ASSIGNS
Each covenant and representation of this Agreement shall inure to the
benefit of and be binding upon each of the parties, their personal
representatives, assigns and other successors in interest.
8. ENTIRE AND SOLE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, representations, warranties, statements,
promises and undertakings, whether oral or written, with respect to the subject
matter of this Agreement. This Agreement may be modified only by a written
agreement signed by all parties.
9. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, and the venue for any action hereunder shall be
in the appropriate forum in the County of Los Angeles, State of California.
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10. COUNTERPARTS
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
11. ATTORNEYS' FEES AND COSTS
In the event that either party must resort to legal action in order to
enforce the provisions of this Agreement or to defend such action, the
prevailing party shall be entitled to receive reimbursement from the
nonprevailing party for all reasonable attorneys' fees and all other costs
incurred in commencing or defending such action, or in enforcing this Agreement,
including but not limited to post judgment costs.
12. FURTHER ACTS
The parties to this Agreement hereby agree to execute any other documents
and take any further actions which are reasonably necessary or appropriate in
order to implement the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.
INCOMNET: INCOMNET, INC.
By: ______________________________________________
Xxxxxx Xxxxxxx, President
RCI PARTIES: __________________________________________________
Xxxxxx Xxxxx
__________________________________________________
Xxxx Xxxxx
__________________________________________________
Xxxx Xxxxx
__________________________________________________
Xxxx Xxxxx
__________________________________________________
Xxxxxx Xxxx
__________________________________________________
Xxxxxxx Xxxxx
BROADWAY PARTNERS
__________________________________________________
Xxxxxx Xxxxx, Partner
__________________________________________________
Xxxx Xxxxx, Partner
