SETTLEMENT AND LEASE AGREEMENT
This Settlement and Lease Agreement ("Agreement") is made and entered into
as of June 17, 1994, by and between XXXXXXX XXXXXXX ("Kasower") and MEMBERSHIP
DEVELOPMENT, INC. ("MDI"), on the one hand and SPORTS-TECH, INC.
("Sports-Tech"), on the other hand.
RECITALS
A. Since on or about August 31, 1992, MDI has provided marketing consulting
and related services to Sports-Tech. Kasower, in his capacity as Chairman of
MDI, was involved in such marketing consulting and related services.
B. Pursuant to the arrangements for MDI to provide such services,
Sports-Tech has made certain payments to MDI and has undertaken to issue certain
shares of Sports-Tech's common stock to MDI in consideration of those services.
C. Disputes have arisen about the nature and terms of the parties'
relationship, and the parties have agreed to resolve all disputes and claims
between them under the terms of this Agreement.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
AGREEMENTS
1. Termination of All Existing Arrangements. Upon execution of this
Agreement, the parties shall have no further obligations to each other except as
specified in this Agreement. All arrangements for MDI to provide services of any
kind to Sports-Tech are terminated by mutual consent effective June 30, 1994,
and MDI shall have no further authority to act on behalf of Sports-Tech. MDI
represents and warrants that it has not made any commitment or incurred and
obligation on behalf of Sports-Tech on or after June 1, 1994.
2. Ownership of Equipment. MDI shall retain possession of and is hereby
granted all of Sports-Tech's right, title and interest in the computer
equipment and software now in MDI's possession. The equipment is accepted by MDI
"as is and where is." Sports-Tech gives no warranty whatsoever to MDI about such
equipment, including any warranties of merchantability, quality or fitness.
3. Ownership of Products and Services. All products, services, intellectual
property, data bases, goodwill, enhancements, trademarks, copyrights and other
materials developed by MDI for Sports-Tech relating to the High School Athletic
Pool, the Collegiate Athletic Network and Sports-Tech Sports Cards ("the
Properties") are and remain the exclusive property of Sports-Tech. MDI
acknowledges that it has no rights whatsoever in the Properties.
4. MDI's Covenant Not to Compete. In consideration of the payment by
Sports-Tech to MDI of the Sum of One Hundred Forty-Four Thousand Dollars
($144,000) in the manner specified in Paragraph 5, below, and in consideration
of the shares issued pursuant to Paragraph 7, below, MDI agrees that neither it
nor any of its officers, directors or shareholders shall, at any time during the
period from the date of this Agreement until June 30, 1997, in the United states
or its territories and possessions:
(a) Accept employment with, become involved with, or otherwise engaged,
directly or indirectly, in any business or venture involving development,
marketing or manufacturing of sports video editing systems or products or
services substantially identical to the Properties ("a Competitive Business");
(b) Solicit directly or indirectly customers or former customers of
Sports-Tech with the intent or effect of making them customers of a
substantially identical Competitive Business through the use of customer lists
or other devices which involve identification of present or former customers as
such; or
(c) For the purposes of employment in any substantially identical
Competitive Business, entice or offer employment to any employee who at that
time is employed by Sports-Tech.
These restrictions do not preclude MDI or its officers, directors and
shareholders from involvement in any other sports-related business which is not
a Competitive Business.
5. Installment Note Payable to MDI. Sports-Tech shall pay to MDI the sum of
Six Thousand Dollars ($6,000) per month for twenty-four (24) consecutive months,
beginning July 1, 1994. This obligation shall be evidenced by Sports-Tech's
unsecured promissory note in the amount of One Hundred Forty-Four Thousand
Dollars ($144,000), bearing no interest, in the form of Exhibit 1 attached
hereto. Payments shall be sent by Sports-Tech on the first business day of each
month to MDI at 00000 Xxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, or to such
other address as MDI shall designate in writing. If any monthly payment is not
received by MDI by the seventh (7th) day of any month, then MDI shall notify
Sports-Tech by facsimile that the payment is past due. After such notice, the
promissory note shall be in default unless the overdue monthly payment is
transmitted to MDI by any method and received by
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MDI on or before the fifteenth (15th) day of the month or unless the monthly
payment is transmitted by MDI by Sports-Tech via overnight courier service on
the fifteenth (15th) day of the month providing for delivery to MDI the
following business day. In the event of such default, MDI may accelerate the
balance due.
6. Cancellation of All Options and Warrants. All warrants and options held
by MDI with respect to any shares of Sports-Tech's common stock are hereby
canceled by mutual agreement.
7. Issuance of Shares to MDI. Concurrently with the execution of this
Agreement, Sports-Tech shall deliver 100,000 unregistered shares of
Sports-Tech's common stock, represented by Certificate No. SPTK 1009, dated June
9, 1994. Upon execution of this Agreement, Sports-Tech shall instruct its
transfer agent to immediately issue and deliver to MDI 150,000 additional
unregistered shares of Sports-Tech's common stock. Sports-Tech shall cause its
counsel to file a registration statement with the SEC as to these 250,000
unregistered shares ("the Shares") not later than sixty (60) days after the date
of filing Sports-Tech's Form 10-K for the fiscal year ended June 30, 1994. MDI
represents and warrants that it is acquiring the Shares for its own account as
principal, for investment purposes only, and not with a view to or for sale in
connection with any distribution thereof, within the meaning of the Securities
Act of 1933, as amended. MDI shall sign such documentation as may be required by
the SEC to obtain registration of the Shares. In the event litigation is filed
to enforce this paragraph 7, the prevailing party shall be entitled to recover
its attorneys' fees and litigation expenses.
8. Restriction on Sale of the Shares. During the period to and including
October 31, 1994, MDI shall sell no more than fifteen thousand (15,000) of the
Shares in any calendar month, except that, so long as the average trading volume
of Sports-Tech's common stock exceeds ten thousand (10,000) shares per day for
the ten (10) consecutive trading days ending the day prior to the date of a sale
by MDI, this restriction shall not apply. Any shares sold by MDI shall not be
included in the trading volume for purposes of determining this average. MDI
agrees and acknowledges that injunctive relief is one appropriate remedy for
violation of this provision. In the event litigation is filed to enforce this
paragraph 8, the prevailing party shall be entitled to recover its attorneys'
fees and litigation expenses.
9. MDI's Release of Sports-Tech. In consideration of the mutual promises
and releases exchanged herein, and except for the obligations expressly
undertaken in this Agreement, MDI, on behalf of itself, and on behalf of its
respective successors, trustees and assigns, hereby forever and fully releases
Sports-Tech, and its past and present employees, agents, representatives,
affiliates, successors, predecessors, assigns, partners, accountants, attorneys,
shareholders, officers and directors, from any and all, known
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or unknown, anticipated or unanticipated, accrued or unaccrued, suspected or
unsuspected, or fixed, conditional or contingent actions or causes of action, at
law or in equity, suits, demands, debts, defenses, claims, contracts, covenants,
liens, liabilities, losses, costs, accounts, expenses and damages of every
nature, kind and description, existing as of the date of this Agreement.
10. Kasower's Release of Sports-Tech. In consideration of the mutual
promises and releases exchanged herein, and except for the obligations expressly
undertaken in this Agreement, Kasower, on behalf of himself, and on behalf of
his respective heirs, administrators, successors, trustees and assigns, hereby
forever and fully releases Sports-Tech, and its past and present employees,
agents, representatives, affiliates, successors, predecessors, assigns,
partners, accountants, attorneys, shareholders, officers and directors, from any
and all, known or unknown, anticipated or unanticipated, accrued or unaccrued,
suspected or unsuspected, or fixed, conditional or contingent actions or causes
of action, at law or in equity, suits, demands, debts, defenses, claims,
contracts, covenants, liens, liabilities, losses, costs, accounts, expenses and
damages of every nature, kind and description, existing as of the date of this
Agreement.
11. Sports-Tech's Release of Kasower and MDI. In consideration of the
mutual promises and releases exchanged herein, and except for the obligations
expressly undertaken in this Agreement, Sports-Tech on behalf of itself and its
successors, trustees and assigns, hereby fully and forever releases Kasower and
MDI, and each of them, and their respective past and present employees, agents,
representatives, affiliates, successors, predecessors, assigns, partners,
accountants, attorneys, shareholders, officers and directors, from any and all,
known or unknown, anticipated or unanticipated, accrued or unaccrued, suspected
or unsuspected, or fixed, conditional or contingent actions or causes of action,
at law or in equity, suits, demands, debts, defenses, claims, contracts,
covenants, liens, liabilities, losses, costs, accounts, expenses and damages of
every nature, kind and description, existing as of the date of this Agreement.
12. Waiver of Civil Code Section 1542. With respect to the releases given
in paragraphs 9, 10 and 11, of this Agreement, the parties expressly acknowledge
and agree that this Agreement fully and finally releases and forever resolves
the claims released and discharged in paragraphs 9, 10 and 11, including those
which are unknown, unanticipated or unsuspected or which may hereafter arise as
a result of the discovery of new or additional facts, and the parties to this
Agreement hereby expressly waive all of the benefits under Section 1542 of the
Civil Code of California, as well as under any other statutes, legal decisions,
or common law principles of similar effect, to the extent that such benefits may
contravene the provisions of paragraphs 9, 10 and 11, of this
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Agreement. The parties acknowledge that they have read and understand Section
1542, which provides:
"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."
13. Warranty of No Assignment. The parties to this Agreement each warrant,
represent and agree that they have not heretofore assigned, subrogated,
licensed, pledged, hypothecated, sold or transferred to any person
whatsoever any claim or interest released in paragraphs 9, 19 and 11, of this
Agreement, and that they are authorized to execute this Agreement in all
respects. In the event any claim is made against any party because of any
purported assignment, subrogation, license, pledge, hypothecation, sale or
transfer of any claim or interest released in paragraphs 9, 10 and 11, of this
Agreement, the party who purportedly assigned, subrogated, pledged, licensed,
hypothecated, sold or transferred the claim or interest shall defend, indemnify
and hold harmless the party against whom the claim is made, from any loss,
damages, costs and attorneys' fees incurred.
14. Indemnity of MDI by Sports-Tech. Notwithstanding the general release
given is this Agreement, in the event a claim or suit is asserted against MDI by
a person not a party to this Agreement on the basis that MDI is liable on
account of any act or omission committed by Sports-Tech prior to the date of
this Agreement, Sports-Tech shall defend, indemnify and hold MDI harmless from
any loss, damage or attorneys' fees incurred.
15. Indemnity of Sports-Tech by MDI. Notwithstanding the general release
given in this Agreement, in the event a claim or suit is asserted against
Sports-Tech by a person not a party to this Agreement on the basis that
Sports-Tech is liable on account of any act or omission committed by MDI prior
to the date of this Agreement, or on the basis that Sports-Tech is liable for
any obligation or commitment undertaken by MDI on or after June 1, 1994, MDI
shall defend, indemnify and hold Sports-Tech harmless from any loss, damage or
attorneys' fees incurred.
16. No Admission of Liability. Each party expressly understands and
acknowledged that this Agreement is entered into for the purpose of compromising
disputed claims and avoiding the expense and inconvenience of litigation, and is
not, and shall not be construed to be, an admission on the part of any party of
any unlawful or wrongful conduct or any liability whatsoever.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties. Each party expressly acknowledges
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that in entering into this Agreement, it or he has not relied upon any statement
or representation made by the other parties or the other parties' representative
which is not set forth herein. Without limiting the generality of the foregoing,
MDI expressly acknowledges that neither Sports-Tech nor any representative of
Sports-Tech has made any representations about the financial condition of the
company, the price or expected price of shares of the company's stock or the
solvency of the company now or in the future.
18. No Construction Against Any Party. Each of the parties hereto
acknowledges that this Agreement has been negotiated at arm's length among
persons knowledgeable in the matters dealt with herein, and that they have had
the opportunity to be represented by counsel in connection with the making and
execution of this Agreement, but that MDI elected voluntarily not to consult
with counsel. Any rule of law, including but not limited to, California Civil
Code Section 1654, or any other statutes, legal decisions or common law
principles of similar effect, that would require interpretation of any
ambiguities in this Agreement against the party who drafted it, is of no
application and is hereby expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intentions of the
parties hereto.
19. Inferences Not Permissible. Nothing in this Agreement shall be
construed to permit any inference that Kasower maintains any relationship with
MDI other than that of the duly elected Chairman of the Board serving at the
pleasure of the shareholders of MDI.
20. Applicable Law. The validity of this Agreement and any of its terms or
provisions, as well as the rights and duties of the parties hereunder, shall be
governed by the laws of the State of Nevada.
21. No Modification Unless in Writing. This Agreement may not be modified
except by a writing signed by all parties.
22. Further Assurances. The parties agree to cooperate with one another to
sign, execute and deliver any and all documents or writings necessary, proper or
helpful in order to carry out or effectuate any of the provisions of this
Agreement.
23. Severability. If any clause or paragraph or any part thereof in this
Agreement is held to be unenforceable, void or voidable, all remaining
provisions shall nevertheless continue in full force and effect.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same document.
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IN WITNESS WHEREOF, the parties have executed this agreement as of the date
written above:
SPORTS-TECH, INC. MEMBERSHIP DEVELOPMENT, INC.
By /s/ XXXXXX XXXXXXXXXX By /s/ XXXXXXX XXXXXXX
--------------------- ----------------------
President Chairman
/s/ XXXXXXX XXXXXXX
----------------------
Xxxxxxx Xxxxxxx
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PROMISSORY NOTE
$144,000 Beverly Hills, California
June 17, 1994
For value received, the undersigned promises to pay to Membership
Development, Inc. at Calabasas, California, in installments as herein stated,
the sum of One Hundred Forty-Four Thousand Dollars ($144,000), without interest.
Payment shall be made in installments of Six Thousand Dollars ($6,000) per month
for twenty-four (24) consecutive months, beginning July 1, 1994. Payment shall
be sent on the first business day of each month.
There shall be a default under this note if any installment is not received
by the holder of this note by the next business day after the fifteenth day of
the month, provided written default notice has been given to maker by facsimile
at (000) 000-0000 (or such other facsimile number as maker may designate) by the
seventh day of the month. Should default be made in the payment of any
installment, the whole unpaid sum balance shall become immediately due upon
notice at the option of the holder of this note.
This note may be prepaid at any time in whole or in part without premium or
penalty. If action be instituted on this note, the maker promises to pay
reasonable attorneys' fees to the holder.
SPORTS-TECH, INC.
By: /s/ XXXXXX XXXXXXXXXX
------------------------
XXXXXX XXXXXXXXXX
PRESIDENT
EXHIBIT 1