DESCRIPTION - Settlement Agreement and Mutual Release between Diversified
Printing & Publishing Services, Inc., Xxxxx Xxxxxx, and T. Xxx Xxxxxxxx,
and Datacat, Inc., Auto-Graphics, Inc. and Xxxxxx X. Xxxx dated September
30, 1997.
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the "Agreement) dated
effective September 30, 1997 is entered into by and between (1)
Diversified Printing & Publishing Services, Inc. ("Diversified"),
Gannam/Xxxxx Publishing, Inc. ("GK"), Xxxxx Xxxxxx ("Xxxxxx") and T. Xxx
Xxxxxxxx ("Kahraman"), on the one hand (individually and collectively the
"Gannam Parties"), and (2) Datacat, Inc. ("Datacat"), Auto-Graphics, Inc.
("AG"), and Xxxxxx Xxxx ("Xxxx"), on the other (individually and
collectively the "Datacat Parties").
RECITALS
This Agreement is entered into with reference to the following facts:
1. Diversified, GK, Gannam, Datacat, AG and Cope are parties to a civil
action (collectively the "Parties"), entitled Diversified Printing &
Publishing Services, Inc. v. Datacat, Inc., Case No. 766695, pending in
the Orange County Superior Court, and involving a complaint and two cross-
complaints (the "Action");
2. Each of the Parties wishes to resolve the Action without further
litigation and deem it to be in their best interests and to their mutual
advantage to forever settle and compromise all claims, controversies,
demands or causes of action between them;
3. This Settlement Agreement and Mutual Release is not intended to and
shall not be deemed to benefit or cover Xxxxx Xxxxxx and/or Catalog
Services Company (collectively herein "Xxxxxx/CSC"), or in any way affect
any claims Datacat may or may not have against Xxxxxx/CSC pertaining to or
otherwise in respect of Xxxxxx'x prior resignation from Datacat,
competition with Datacat in the HVACR catalog business (the "Xxxxxx/CSC
Business") and/or the alleged use of all or any portion of Datacat's HVACR
database, systems, procedures, customer lists, pricing information or
otherwise to conduct such Xxxxxx/CSC Business following his departure from
Datacat including as against Datacat (referred to herein collectively as
the "Xxxxxx Matter").
4. Gannam and Kahraman are currently serving as Directors of Datacat
and hereby agree to and shall resign those positions simultaneously with
and upon execution of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, the sufficiency of which is hereby
expressly acknowledged by each of the undersigned parties including the
Parties, such parties have, intending to legally bound and obligated
thereby, entered into this Agreement.
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
I. PAYMENT.
A. On or before September 30, 1997, a certified or bank cashier's check
in the amount of Two Hundred Thousand Dollars ($200,000) shall be
delivered to counsel for Diversified payable to "Diversified Printing &
Publishing, Inc. and Xxxxxx & Xxxxx LLP Trust Account" (the "Settlement
Payment").
II. DISMISSAL OF THE ACTIONS/TENDER OF SHARES.
A. Concurrently with the delivery of the Settlement Payment (1) the
Parties shall exchange pre-executed Requests for Dismissal with prejudice
of each of their respective complaints and cross-complaints in the Action,
and (2) GK shall surrender to DATACAT its original share certificate for
all of its stock in Datacat properly endorsed in blank for transfer (the
"GK Datacat Stock"), together with a certified copy of GK's corporate
resolution(s) approving and authorizing this Agreement including the
surrender, transfer and/or other conveyance of the GK Datacat Stock as
provided for herein. Counsel for the respective Parties shall hold such
Requests For Dismissal forms pending the actual payment of the Datacat
check referenced above as the Settlement Payment, after which such counsel
are hereby authorized to file such Requests For Dismissals as provided or
otherwise contemplated hereinabove.
B. GK and Gannam hereby each represents, warrants and covenant to and
for the benefit of AG and Datacat that GK is the sole and exclusive owner
of the GK Datacat Stock (as defined in paragraph II.A. above), that such
Stock is free and clear of any and all liens or encumbrances, and that GK
is authorized and empowered to surrender and otherwise transfer, deliver
and otherwise convey the GK Datacat Stock as provided for in this
Agreement; and, further, GK, Gannam and Diversified and each of them
hereby agree and promise to indemnify and hold harmless Datacat and A-G
from any and all claims, cause of action, expenses including reasonable
attorneys' fees and expenses, debts, obligations and liabilities arising
as a result of or in connection with the assertion by any person or entity
against Datacat and/or A-G of any claim of ownership, right, title and/or
interest in and to such GK Datacat Stock or any part thereof.
III. MUTUAL GENERAL RELEASE.
A. Diversified, GK, Gannam and Xxx Xxxxxxxx, on the one hand, and
Datacat, AG, and Cope, on the other, release and forever discharge each
other of and from any and all claims, potential claims, complaints,
demands, damages, debts, liabilities, accounts, costs, attorneys' fees,
expenses, liens, actions, causes of action, suits, and losses of every
kind and nature whatsoever, whether now known or unknown, suspected or
unsuspected, which they now have, own or hold, or at any time before ever
had, owned or held, against each other (the "Released Matters").
B. The Released Matters, however, shall not extend to, impair, or
include any rights, obligations, or remedies which the undersigned parties
may have under this Agreement.
C. The Released Matters are not intended by the undersigned parties to
extend to or otherwise affect any rights which Datacat and/or AG may or
may not have against Xxxxxx/CSC in any respect.
D. It is the intention of the undersigned parties that this Agreement
shall be effective as a full and final accord and satisfaction, and
release of each and every one of the Released Matters. In furtherance of
this intention, each of the undersigned acknowledges that they are
familiar with Section 1542 of the California Civil Code ("Section 1542")
which provides 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.
Each of the undersigned parties hereby waives and relinquishes every right
or benefit which they have or may have under Section 1542 to the full
extent that they may lawfully waive such right or benefit with regard to
the Released Matters.
E. In connection with such waiver and relinquishment, each of the
undersigned parties acknowledges that they are aware that they may later
discover facts in addition to or different from those which they now know
or believe to be true with respect to the subject matter of this
Agreement, but that it is their intention to fully, finally and forever,
settle and release all Released Matters, known or unknown, suspected or
unsuspected, which now exist, may exist or previously existed between
them.
F. The releases in this Agreement shall, subject to the limitations
expressly set forth herein, extend and inure to the benefit of each
released party and each of their past and present officers, employees,
directors, agents, representatives, attorneys, alter egos, spouses,
shareholders, partners, joint ventures, heirs, executors, administrators,
affiliates, subsidiaries, divisions, legal predecessors, successors,
assigns, licensees, and their respective insurers, sureties, and
underwriters.
IV. MUTUAL REPRESENTATIONS AND WARRANTIES.
A. Each of the undersigned parties warrants and represents that they
have not previously assigned or transferred, or purported to assign or
transfer, to any third party any of the Released Matters.
B. Each of the undersigned parties to this Agreement represents and
warrants that they have been represented and advised fully by independent
counsel of their own choice through all negotiations which preceded the
execution of this Agreement; and that each such party has read or had read
to them all of this Agreement and had it explained to them by his attorney
and fully understands all the terms used and their significance, including
the legal effect and consequences of waiving the protections of Civil Code
1542.
V. FURTHER SPECIAL REPRESENTATIONS, WARRANTIES,
AGREEMENTS AND COVENANTS BY GANNAM.
X. Xxxxxx, including without limitation for purposes of this paragraph
GK, Diversified and any and all other corporations, partnerships, limited
liability companies, associations, joint ventures and/or other forms of
business enterprise in which Gannam now owns or is otherwise entitled in
the future to own, receive or benefit from directly or indirectly any
share, partnership, joint venture or other interest therein including
without limitation Sterling Litho, Fairway Binding and Gapco (collectively
herein "Gannam Affiliate"), represents, warrants, covenants and otherwise
agrees that neither he nor any Gannam Affiliate and/or Kahraman
collectively herein also the "Gannam Parties") now owns and/or is entitled
to own or otherwise receive or benefit from the Xxxxxx/CSC Business
collectively "Xxxxxx/CSC Ownership Interest"); and, further that the
Gannam Parties will not hereafter obtain or receive any such
Xxxxxx/CSC Ownership Interest which, to the extent it ever has or in the
future does exist, such Ownership Interest is hereby sold, transferred and
conveyed to Datacat or its designee as part of the consideration for this
Agreement. It is expressly understood, however, that any and all
commercial printing services heretofore provided by Diversified to
Xxxxxx/CSC, whether for cash, credit or some combination thereof, shall
not be deemed to constitute an ownership interest by the Gannam Parties in
the Xxxxxx/CSC Business; and, provided further, that the foregoing
representations and warranties only as set forth in this sub-paragraph
shall not, in any event or under any circumstances, be a basis for the
initiation of any claim or action by the Datacat Parties against the
Gannam Parties in respect of the subject matter or such
representations/warranties including without limitation any allegation
that the subject representations/ warranties or any of them was not
accurate or was in any way false or misleading and such representations
and warranties (herein the "Special Rep/Warranty") shall under no
circumstances be the basis for the assertion that the Datacat Parties were
induced to enter into and/or perform this Agreement which is hereby
acknowledged and agreed by the Datacat Parties not to be the case. If
any claim or cause of action is ever brought by the Datacat Parties or any
of them against the Gannam Parties or any of them based on or in respect
of the Special Rep/Warranty, the Datacat Parties shall indemnify and hold
harmless the Gannam Parties named as defendants in any such breach of
Special Rep/Warranty action from any and all claims, cause of action,
expenses including reasonable attorneys' fees and expenses, debts,
obligations and liabilities arising as a result of or in connection with
the assertion of any such claim and/or cause of action as specified
herein.
B. The Gannam Parties and each of them hereby agree and covenant,
subject only to the provisions of the following subparagraph, not to,
directly or indirectly, participate in and/or otherwise assist Xxxxxx/CSC
and/or the Xxxxxx/CSC Business to compete with Datacat's HVACR catalog
business for a period of five (5) years from the effective date of this
Agreement including without limitation by providing Xxxxxx/CSC with any
advice, goods, services and/or financial support of any kind whatsoever at
any time during such five year period of time pertaining or related to, or
otherwise in respect of, the Xxxxxx/CSC Business or matters related
thereto.
C. Notwithstanding the prohibitions set forth in the foregoing sub-
paragraph, Diversified may if it so chooses provide commercial printing
services, and only such printing and binding services (no composition
services) to the Xxxxxx/CSC Business upon terms no more favorable than
Diversified then regularly offers to its other customers, beginning but
not sooner than two (2) years from the effective date of this Agreement.
X. Xxxxxx and Kahraman, and each of them, acknowledge and agree that
the full and complete releases in this agreement include, without
limitation, any and all claims that Gannam and Kahraman allegedly breached
their fiduciary duties or other duties to Datacat and that Datacat's
willingness to so release such claims is based, in part, upon the Gannam
Parties' covenants not to compete as set forth in paragraph V(A) hereof .
E. The Gannam Parties' will comply with all laws concerning any and all
discovery requests that may be propounded in any future civil action that
may or
may not be filed by Datacat against Xxxxxx/CSC.
X. Xxxxxx and the Gannam Affiliate each hereby further agrees and
covenants to provide to Datacat, and Datacat shall receive from
Diversified, at the time that the parties exchange the Requests For
Dismissals and delivery of the Settlement Payment provided for in
paragraphs II.A and I.A., respectively, of this Agreement the following:
All film (of covers and/or pages), artwork, camera ready and/or electronic
copy provided to Diversified by Datacat including any of its customers to
Diversified, for the production of catalogs, brochures,
mailers, price lists and other printed matter, in the possession, custody
or control of Diversified.
VI. ATTORNEYS' FEES.
A. In the event of any action or proceeding to enforce or interpret
this Agreement, the prevailing party, in addition to all other legal or
equitable remedies possessed, shall be entitled to be reimbursed for all
costs and expenses, including reasonable attorneys' fees, paid or incurred
by reason of or otherwise in connection with such action or proceeding.
Except as provided in this paragraph, the undersigned parties are to bear
their own costs and expenses including attorneys' fees, in connection with
the Action and execution of this Agreement.
VII. ENTIRE AGREEMENT.
A. This Agreement constitutes the entire agreement and understanding
concerning the subject matter hereof between the undersigned parties, and
supersedes and replaces all prior negotiations, proposed agreements and
agreements, written or oral. This Agreement is intended to and shall be
deemed for all purposes to be for the benefit of, be binding upon and be
enforceable against the undersigned parties and their respective
successors, assigns, heirs, administrators and/or executors. Except as
may be expressly provided for herein, this Agreement is not intended and
shall not be deemed or otherwise interpreted to be for the benefit of any
person or entity which is not a party/signatory to this Agreement.
B. The undersigned parties acknowledge and agree for the benefit of
each other that they have not entered into and agreed to perform this
Agreement based upon or in consideration of any statement, representation,
warranty, understanding, agreement, covenant, promise, guaranty or any
other matter which is not expressly set forth or otherwise provided for in
this Agreement.
C. The undersigned parties' representations, warranties, agreements
and/or covenants as set forth in this Agreement are, where applicable,
intended to survive and remain fully operative and enforceable against the
party(s) providing such representations, warranties, agreements and/or
covenants following the actual settlement and dismissal of the instant
Action in accordance with the terms of any and all such representations,
warranties, agreements and/or covenants.
VIII. CHOICE OF LAWS.
A. This Agreement shall in all respects be interpreted, enforced and
governed by the laws of the State of California.
IX. NO ADMISSION OF LIABILITY.
A. It Is expressly understood and agreed by the undersigned parties
including the Parties that this Agreement is being made solely for the
purpose of avoiding the expense and inconvenience of further litigation
and that it is not an admission on the part of any party to this Agreement
of any unlawful or wrongful conduct or of any liability to any other Party
as alleged in the above referenced Action or otherwise, all of which is
expressly denied.
X. COUNTERPARTS.
A. This Agreement may be executed in several counterparts, each of
which shall be an original as against any party who signed it, and all of
which shall constitute one and the some document. Facsimile signatures
may be used as originals for the purposes of effectuating this Agreement.
XI. SEVERABILITY.
A. If any term or provision of this Agreement shall be finally
determined to be illegal or unenforceable for any reason, all other terms
and provisions in this Agreement shall nevertheless remain effective and
be enforced to the fullest extent permitted by law.
XII. JOINTLY DRAFTED.
A. The undersigned parties' legal counsel have jointly drafted the
provisions of this Agreement, and no inference or rule of construction
shall be made by reason of the party who has drafted any provisions
contained in this Agreement. For the purposes of interpretation, it shall
be assumed that all of the undersigned parties drafted each provision and
each party expressly waives the doctrine of contra proferentum as it might
otherwise apply to interpreting this Agreement.
IN WITNESS WHEREOF, the undersigned parties, thereunto duly authorized,
have executed and delivered this Agreement as of the date first set forth
above.
Xxxxx Xxxxxx
Ss/ Xxxxx Xxxxxx
T. Xxx Xxxxxxxx
Ss/ T. Xxx Xxxxxxxx
DIVERSIFIED PRINTING AND PUBLISHING SERVICES, INC.
By: Ss/Xxxxx Xxxxxx
Title: President
GANNAM XXXXX PUBLISHING, INC.
By: Ss/Xxxxx Xxxxxx
Title: President
Xxxxxx X. Xxxx
Ss/Xxxxxx X. Xxxx
AUTO-GRAPHICS, INC.
By: Ss/Xxxxxx X. Xxxx
Xxxxxx X. Xxxx, President
APPROVED AS TO FORM ONLY:
LAW OFFICES OF XXXXXX X. XXXXX, P.C.
By: Ss/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx,
Attorney for Auto-Graphics, Inc.
and Xxxxxx X. Xxxx
LAW OFFICES OF XXXXX XXXXXX
By: Ss/Xxxxx Xxxxxx
Xxxxx Xxxxxx,
Attorney for Datacat, Inc.
XXXXXX & XXXXX LLP
By: Ss/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx,
Attorneys for Diversified
Printing & Publishing Services,
Inc., Gannam/Xxxxx Publishing,
Inc., Xxxxx Xxxxxx and T. Xxx Xxxxxxxx
