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United States District Court, Northern District of California

June 2, 2003


The opinion of the court was delivered by: Bernard Zimmerman, United States District Magistrate Judge

The parties hereto having entered into a written Settlement Agreement dated May 23, 2003, and a Stipulation for Dismissal of this action incorporating such Settlement Agreement; and the Settlement Agreement and Stipulation for Dismissal providing for the retention by the court of jurisdiction over the enforcement of such Agreement, and good cause appearing therefor,


1. This action is dismissed without prejudice as to defendant HYPER CORPORATION, a Texas corporation;
2. This action is dismissed with prejudice as to defendant KURT FISCHER;
3. The court retains jurisdiction over enforcement of the Settlement Agreement attached hereto as Exhibit "A" in accordance with the terms thereof.


THIS SETTLEMENT AGREEMENT (hereinafter "Agreement") is made effective as of January 24, 2003, by and between Synergent Technologies, Inc., a Maryland corporation ("Synergent"), on the one hand, and Hyper Corporation, a Texas corporation (hereinafter "Hyper") and Kurt Fischer, an individual (hereinafter "Fischer") (Hyper and Fischer being hereinafter collectively referred to as "Defendants"), on the other hand.


A. In March 2001, Hyper engaged Synergent to develop automated test scrips for a new Bluetooth RF Test System as validated by the Bluetooth SIG. Disputes arose thereafter between Synergent and Defendants with regard to the services provided by Synergent and with regard to Hyper's failure to make full payment on Synergent's in voices for the same.

B. On April 5, 2002, Synergent filed a Complaint against Hyper and Fischer in the United States District Court for the Northern District of California, Case No. C 02 1654 BZ (hereinafter the "Action"), alleging causes of action for breach of written and oral contract, quantum meruit, work and services at an agreed price, open book account, account stated, false promise, and violation of California Business & Professions Code § 17200.

C. Following mediation conducted by the Hon. Maria-Elena James, Magistrate Judge, Synergent and Defendants agreed to settle the Action. This Agreement incorporates the terms and conditions of such settlement placed on the record in the Action before Judge James on January 24, 2003.


NOW, THEREFORE, in consideration of the mutual covenants agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Payments By Hyper to Synergent. Hyper shall pay to pay to Synergent the sum of $17,000, payable as follows: Upon execution of this Agreement, the amount of $2,833.34 (by means of a check dated no later than June 1, 2003), and thereafter on the first day of each month commencing on July 1, 2003, ten (10) equal monthly installments of $1,416.67 each ("installment Payments").
2. Royalty Payments by Hyper.

(a) Royalties on Product Sales. In addition to the monthly installment payments described in Section 1 above, Hyper agrees to pay to Synergent royalties ("Royalties") in the amount of five percent (5%) of the Net Sales Price, as defined below, of any and all sales, leases or licenses by Hyper of the Bluetooth RF Rest System, including but not limited to all hardware, software and other system components, installation and maintenance fees, together with any and all subsequent upgrades, modifications, and enhancements (whether to hardware or software including installation fees), as well as revenues from any derivative or similar products hereafter developed or sold or licensed by Hyper based upon Bluetooth wireless technology (which shall hereinafter be referred to as the "Product"), beginning on the date of this Agreement (January 24, 2003) to and through August 14, 2005 (the "Royalty Term").
(b) Net Sales Price. As used herein, the term "Net Sales Price" means the actual price paid by a buyer, lessee or licensee on account of the Product as described net only of the following expenses of sale actually paid by Hyper in connection with any sale, lease or licenses of the Product: sales and excise taxes, customs duties, transportation insurance, freight charges, and sales commissions to third-party sales agents not in excess of ten percent (10%) of the actual price paid (except for sales commissions in the People's Republic of China, which shall not exceed twenty percent (20%)), all verified by Hyper sales invoices and packing slips, customer payments, and other appropriate documentation.
(c) Payment Due Dates. Royalties shall be due and payable from Hyper to Synergent within fifteen (15) days after the receipt by Hyper of any funds from any buyer, lessee or licensee of the Product including receipt of any down payment, deposit, installment payment, or final payment.
(d) Post-Royalty Term Payments. The transactions covered by this provision on Royalties will include all sales, leases and licenses of the Product made on or before August 15, 2005, including agreements made on or before August 15, 2005, regardless of when performance is due and of when Hyper receives payment therefor.
3. Maximum Obligations. The maximum amount of Royalties and Installment Payments payable to Synergent under this Agreement shall be $300,000.00 ("Maximum Obligation"), which, except as reduced by credits for payments made under Section 1 and Section 2 above, shall be the amount of Hyper's obligation under this Agreement unless and until judgment for the sum of $125,000 is entered against Hyper pursuant to Section 8 below.
4. Reporting Requirements.

(a) Documentation. Hyper shall deliver to Synergent's attorneys, as hereinafter designated, true copies of all documents reasonably required by counsel to verify each sale, lease, license or other disposition of the Product during the Royalty Term, and the full terms and conditions thereof, unless and until the Maximum Obligation hereunder has been first satisfied. The documents that shall be delivered shall include, but not be limited to, the following: purchase orders; purchase, lease or license agreements; any and all amendments thereto; deposit agreements; letters of intent; invoices; receipts; packing slips; letters of credit; and commission statements. Such documentation shall be provided no later than fifteen (15) days after the execution, receipt or issuance of any of the foregoing documents, and within fifteen (15) days after receipt by Hyper of any funds from any buyer, lessee or licensee of the Product, including receipt of any down payment, deposit, installment payment, or final payment.
(b) Accountant's Verification. Hyper's outside accountant must submit to Synergent's counsel signed quarterly verifications of each and every sale, lease or license of the Product during the preceding calendar quarter. Such verifications may be in summary form but shall include all of the following information: Date of sale or other transaction; Name of purchaser, description of all item(s) of Product sold, leased or licensed; Net Sales Price, as defined herein, and all components for the calculation thereof, including gross sales price and all permitted deductions therefrom as set forth in Section 2(b) above, all amounts paid by each purchaser, lessee or licensee in consideration and on account of each such transaction; and dates of payments. Such quarterly verifications shall be submitted to counsel for Synergent on the last day of April, July, October, and January, commencing April 30, 2003, to and through the later of the date that the Maximum Obligation hereunder has been paid or the date judgment is entered as provided in Section 7 below.
(c) Confidentiality. All documents provided by Hyper to Synergent pursuant to Section 4(a) and 4(b) above shall remain confidential and shall be used only for the purpose of evaluating and procuring Hyper's compliance with, and the enforcement of, this Agreement.
5. Continuous Operations: Maximum Obligation Due on Sale or Change in Control. Hyper shall continuously produce, market, and sell the Product during the Royalty Term. The parties agree that in the event of any sale by Hyper of all or substantially all of its assets, or in the event of a change in control of Hyper, or upon the sale of all or substantially all of Hyper's rights in and to Product and the marketing and sale thereof (collectively, "Change in Control"), there is a risk that Hyper will breach its obligations under this Agreement and will not pay the full Maximum Obligation. The parties therefore agree that in the event of a Change in Control, Hyper shall immediately pay to Synergent as liquidated damages the sum of $300,000 less all amounts previously paid by Hyper to Synergent under this Agreement, and that such sum represents a reasonable estimate of Synergent's damages for breach of this Agreement in the event of a Change in Control; provided, however, such liquidated damages shall not be due and payable if Hyper's obligations set forth in this Agreement are assumed in writing, with Synergent's approval, which shall not be unreasonably withheld, by a financially qualified person.
6. Security Agreement. By this agreement, Hyper hereby grants to Synergent a first priority security interest in all contracts for and accounts receivable from the sale, lease or license of the Product and the products thereof ("Security Interest"). The Security Interest shall secure the payment and performance of Hyper's obligations under this Agreement in the principal amount of Three Hundred Thousand Dollars ($300,000.00) and the payment and performance of all other liabilities and obligations of Hyper to Synergent hereunder, whether, direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter arising. Hyper will not sell, dispose, or otherwise transfer the Product without the prior written consent of Secured Party, and Hyper shall keep the Product free from unpaid charges, taxes, and liens; provided, however, Synergent agrees to release its Security Interest with respect to any Product purchased, leased or licensed by a third party upon payment of the full consideration therefor and of the Royalties due hereunder upon the sale, lease or license of such Product in the ordinary course of business as set forth in Section 2 above. Hyper shall, within-five (5) days of request by Synergent, execute alone or with Synergent and deliver to Synergent any financing statement or other document or procure any document, and pay the cost of filing the same in all public offices wherever filing is deemed by secured party to be necessary to evidence, confirm or effectuate the Security Interest and the perfection and agreed priority thereof. Hyper shall be in default under this Agreement upon the happening of any of the following: (a) any misrepresentation in connection with this Agreement on the part of the Hyper, (b) any noncompliance with or nonperformance of Hyper's obligations under this Agreement; (c) if Hyper is involved in any financial difficulty as evidenced by (i) an assignment for the benefit of creditors, or (ii) an attachment or receivership of assets not dissolved within thirty (30) days, or (iii) the institution of bankruptcy proceedings, whether voluntary or involuntary, which is not dismissed within thirty (30) days from the date on which it is filed. Upon default and at any time thereafter. Synergent may declare all obligations secured hereby immediately due and payable and shall have the remedies of a secured party under the California Commercial Code. No waiver by Synergent of any default shall operate as a waiver of any other default or of the same default on a future occasion. The Security Interest granted herein shall terminate upon payment by Hyper of all sums due under this Agreement.
7. Dismissal of Action; Retention of Jurisdiction by District Court. Synergent and Hyper agree that the United States District Court for the Northern District of California shall retain jurisdiction to enforce this Agreement, notwithstanding the dismissal of the Action, which as to Hyper shall be without prejudice, and to issue the judgment described in Section 7 below. The Order of Dismissal of the Action shall state that the Court retains jurisdiction over the matter and will incorporate the terms of this Agreement in its Order. In further consideration of the settlement of the Action, the Action as against Fischer shall be dismissed without prejudice.
8. Payments Orders Upon Default, and Judgment After Expiration of Royalty Term. If Hyper fails to make any payment required hereunder as and when due, or fails to provide the documentation required under Section 4 above, or otherwise defaults under this Agreement, Synergent shall be entitled to seek enforcement of this Agreement by applying for an order to show cause by why Hyper should not be ordered immediately to make such overdue payment (including any amount of liquidated damages due under Section 5 above) or provide such required documentation or otherwise cure any default. In addition, should Hyper fail to pay Synergent a total of $125,000 from the Installation Payments under Section 1 above and from Royalties under Section 2 above, Synergent shall be entitled, at any time after expiration of the Royalty Term, to a money judgment against Hyper in the amount of $125,000 less the total amounts paid to Synergent under this Agreement by Hyper, such money judgment may be obtained by ex parte application to the court supported by the declaration of Synergent's counsel showing the facts entitled Synergent to judgment and the amount thereof, copies of the application for judgment and supporting declaration shall be served on Hyper and its counsel, who shall have seven (7) days to file any responses or objections thereto.
9. Mutual Releases. Synergent on the one hand, and Hyper and Fischer, on the other hand, hereby mutually release and forever discharge each other, and their respective directors, shareholders, officers, agents, employees, and attorneys, from any and all claims, demands, damage, liabilities, obligations, agreements, expenses (including attorney's fees), actions and causes of action, of whatever description or nature, arising out of or relating to the matters and claims alleged in the Action; provided, however, that these releases shall not apply to any obligations set forth in this Agreement.
10. Waiver of Civil Code Section 1542. In further consideration of the settlement of the Action, each puny understands and agrees that there is a risk that, subsequent to the execution of this Agreement, each of them may suffer, or discover, loss or damage which is presently unknown, unsuspected, unanticipated or undisclosed, arising from or relating to the matters released herein. All parties hereto expressly waive any and all rights relating to the claims released herein under the provisions of Section 1542 of the Civil Code of California, which provides:
11. Warranties Against Assignment. Each party hereto represents and warrants: the other that it is the sole and lawful owner of all right, title and interest in and to every matter or thing released herein, and that it, he or she has not heretofore assigned or transferred, or purported to assign or transfer, to any person or entity any claims or other matters herein released. Hyper and Fischer hereby each represent and warrant that, as of the date of this Agreement and upon execution thereof, Hyper is and shall be the sole lawful owner of all right, title and interest in and to the Product. Each party shall indemnify, defend and hold harmless the other party for any breach or inaccuracy in any of the foregoing representations and warranties, which indemnification shall include reasonable attorneys' fees.
12. Compromise Only. This Agreement is a result of a compromise of disputed claims. Nothing contained herein shall be construed as an admission of liability or responsibility or of any fact on the part of any party hereto, all such liability or responsibility hereby being expressly disclaimed.
13. California Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, except insofar as federal procedural rules are applicable under Sections 7 and 8 above.
14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
15. Entire Agreement. This Agreement contains all the representations and the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior understandings, agreements (whether written, verbal, implied or otherwise) and communications with respect thereto. None of the terms hereof shall be amended, waived, or otherwise modified except pursuant to a written instrument duly executed by both parties.
16. Consultation with Attorney. Each party acknowledges that it or he has had the benefit and advice of independent legal counsel concerning this Agreement and the legal effects.
17. Legal Expenses and Costs. Each party hereto shall be solely responsible for its own legal expenses and costs in connect on with the negotiation, execution, and performance of this Agreement.
18. Attorney's Fees. The prevailing party in any action or proceeding (including any motion) to enforce this Agreement shall be entitled to recover its reasonable attorney's fees and costs of suit.
19. Time of Essence. Time is of the essence of this Agreement.
20. Notices. Any notices to be given hereunder by either party to the other may be effected either by personal delivery, in writing or by mail, registered or certified, postage prepaid with return receipt requested. As of the date of this Agreement, any notices to Synergent must be sent, transmitted, or delivered, as the case may be, to the following addresses:
Synergent Technologies, Inc. 5301 Buckeystown Pike, Suite 306 Frederick, Maryland 21704 Attention: Randal Burnette, President

Allen Matkins Leek Gamble & Mallory LLP 333 Bush Street, 17th Floor San Francisco, California 94104 Attention: Henry Lerner, Esq.
As of the date of this Agreement, any notices to Hyper must be sent, transmitted, or delivered, as the case may be, to the following addresses:
Hyper Corporation 1279 Quarry Lane, Suite B Pleasanton, California 94566 Attention: Kurt Fischer, President

Scopelitis, Garvin, Light & Hanson 1390 Market Street, Suite 1204 San Francisco, California 94102 Attention: James Attridge, Esq.
Each party may change the address by written notice in accordance with this paragraph. Notices personally delivered will be deemed communicated as of actual receipt; notices mailed will be deemed communicated five (5) days after mailing.
20. Duplicate Originals; Counterparts. The parties shall execute two (2) originals of this Agreement, which may be executed in counterparts. Synergent and Hyper shall each receive one fully executed original. Notwithstanding the foregoing, each party agrees to deliver its signature to the other by facsimile, followed by delivery of such party's original signature page by FedEx or overnight mail; provided, however, that the failure of either party to deliver such original signature shall not impair the effectiveness or enforceability of any fax signature hereof.
21. Further Assurances. Each party hereto agrees immediately to execute and deliver any and all further documents and/or forms and perform and any and all further acts as may be reasonably necessary or required on its or his part to give full effect to and to perpetuate, complete and facilitate implementation of the provisions set forth in this Agreement and the intentions of the parties hereto.
22. Warranty of Authority. Each party hereto covenants and represents that it is fully authorized to enter into this Agreement and to carry out the obligations provided for herein. Each person executing this Agreement represents and warrant that (a) the entity for which such person is signing is duly organized and validly existing under the laws of the State of Maryland or Texas, as the case may be; (b) such person is duly and validly authorized to sign this Agreement on behalf of his or her principal; and (c) all corporate action necessary to enter into and perform this Agreement has been duly taken.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

Dated: May 23, 2003 SYNERGENT TECHNOLOGIES, INC., a Maryland corporation
By: ________________________

Its: ____________________

Dated: May __, 2003 HYPER CORPORATION, a Texas corporation
By: ________________________

Its: ____________________

Dated: May 23, 2003 ____________________________ KURT FISCHER

© 1992-2003 VersusLaw Inc.

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