exv10w29



 







Exhibit 10.29




IN THE UNITED STATES DISTRICT COURT




FOR THE SOUTHERN DISTRICT OF FLORIDA




	 	 	 
	 

	x	 
	TODD AUGENBAUM,
	 	 
	 
	 	 
	Plaintiff,

	 	Civil Action No. 04-80665
	 
	 	 
	          - against -
	 	 
	 
	 	 
	BG CAPITAL GROUP LTD. and
	 	 
	SPECTRUM SCIENCES AND SOFTWARE
	 	 
	HOLDINGS CORP.,
	 	 
	 
	 	 
	Defendants.
	 	 
	 
	 	 
	 

	x	 
	 
	 	 
	 

	x	 
	TODD AUGENBAUM,
	 	 
	 
	 	 
	Plaintiff,

	 	Civil Action No. 05-80992
	           — against -
	 	 
	 
	 	 
	ROBERT GENOVESE,
	 	 
	 
	 	 
	Defendant.
	 	 
	 

	x	 






STIPULATION AND AGREEMENT OF

COMPROMISE, SETTLEMENT AND RELEASE




     Plaintiff Todd Augenbaum (“Plaintiff”), defendants Robert Genovese (“Genovese”) and BG Capital
Group Ltd. (“BG Capital”)(jointly referred to as the “Defendants”), and nominal defendant Spectrum
Sciences & Software Holdings Corp. (“Spectrum”), by and through their respective attorneys, have
entered into the following Stipulation and Agreement of Compromise, Settlement and Release (the
“Stipulation” or the “Settlement”), subject to the approval of the United States District Court for
the Southern District of Florida (the “Court”) :



 









 





     WHEREAS:



     A. Plaintiff is an owner of Spectrum common stock;



     B. On July 16, 2004, Plaintiff commenced an action against Genovese and BG Capital entitled
Augenbaum v. Robert Genovese, et al., Case No. 04-80665 (the “First Action”), seeking the
disgorgement of short-swing profits alleged to have been realized in violation of Section 16(b) of
the Securities Exchange Act of 1934;



     C. Spectrum was named as a nominal defendant on whose behalf the First Action was brought;




     D. On August 30, 2005, the Court dismissed the First Action against Genovese without prejudice
for failing to serve Genovese with process;



     E. On November 4, 2005, Plaintiff commenced a second action against Genovese entitled
Augenbaum v. Robert Genovese, Case No. 05-80992 (the “Second Action” and together with the First
Action referred to collectively as the “Actions”), seeking disgorgement of the same short-swing
profits alleged to have been realized by Genovese in the First Action;



     F. Following arm’s length negotiations by counsel for the parties hereto, such parties desire
to settle and resolve the Actions in accordance with the terms and conditions contained herein.



     NOW, THEREFORE, IT IS STIPULATED AND AGREED, by the parties hereto, in consideration for the
releases and payments contemplated herein, as follows:



The Settlement




     1. The claims raised by the Plaintiff against the Defendants in the Actions shall be dismissed
with prejudice on the merits and Defendants shall be deemed fully, finally and forever released
from such claims whether such claims are raised by Spectrum or on its behalf by Plaintiff or any
other shareholder of Spectrum, in consideration for the payment of $3,250,000 (the “Settlement
Amount”) to Spectrum.



     2. The parties agree that, unless otherwise ordered by the Court, Abraham Fruchter & Twersky
LLP (“AF&T”), counsel for Plaintiff, shall receive, in the manner provided for



 









 







below, 30% of the Settlement Amount ($975,000) as payment of their attorneys’ fees and
reimbursement for any expenses they or their co-counsel incurred or accrued.



     3. Upon execution of the Stipulation, Defendants shall deliver the following items (“Escrow
Items”) to Zuckerman Spaeder LLP (the “Escrow Agent”) to be held in escrow in accordance with the
terms of escrow set forth herein:




	 	a.	 	A promissory note and confession of judgment (the “Note and
Judgment”) duly executed by BG Capital and payable to Spectrum in the amount
$2,450,000 in the form annexed hereto as Exhibit A;
	 
	 	b.	 	The sum of $800,000 (the “First Payment”), which, following
final Court approval as defined below, shall be paid to AF&T as partial payment
of their attorneys’ fees and reimbursement of expenses; and
	 
	 	c.	 	One million shares of Spectrum common stock (the “Escrow Common
Stock”), which shall secure the payment of Defendants’ obligations as set forth
herein.





The Note and Judgment




     4. The Note and Judgment shall provide for the principal payment of $175,000 (the “Second
Payment”) to be due and payable within six months of final Court approval of the Settlement, and
for the principal balance in the amount of $2,275,000 (the “Final Payment”), to be due and payable
within eighteen months of final Court approval of the Settlement.



     5. The Second Payment shall be paid directly to AF&T, as payment of the balance of their
attorney’s fees and expenses.



     6. The Final Payment shall consist of the payment of $2,275,000 to Spectrum.



     7. The Final Payment may be satisfied with tender of Spectrum Sciences’ common stock valued at
the closing market price on the date of delivery; provided, however, that all payments to AF&T
shall be payable in U.S. dollars.



     8. The Note and Judgment shall not provide for the accrual of interest except in the event of
default at which time interest shall accrue at the statutory rate then in effect in Florida



 









 







pursuant to Florida Stat., Section 55.03.



     9. In the event of default, Spectrum may file the Note and Judgment as appropriate and/or take
any and all actions necessary for its enforcement.



Court Approval




     10. As soon as is practicable following execution of the Stipulation, the parties hereto shall
jointly move the Court without notice to shareholders unless otherwise ordered by the Court to
enter an Order (the “Order and Final Judgment”): (1) approving the terms of the Settlement; (2)
dismissing the Actions with prejudice on the merits; and (3) retaining jurisdiction with regard to
any disputes or enforcement proceedings concerning the terms of Settlement.



     11. The parties and their attorneys agree to cooperate fully with one another and use their
best efforts in seeking the Court’s approval of the Settlement and giving effect to its terms and
conditions, including the preparation and execution of any necessary documents or pleadings before
the Court.



     12. The Court will be deemed to have approved the Settlement upon issuance of the Order and
Final Judgment and final Court approval shall be deemed to have occurred upon expiration of the
time to appeal such Order and Final Judgment or, if an appeal is taken of such Order and Final
Judgment, upon entry of an appellate court order affirming the Order and Final Judgment, and the
expiration of the time for filing any further appeal or petition for review.



     13. The Stipulation is in all respects conditioned upon the Court’s approval of the Settlement
as described above. The Stipulation shall be null and void and of no force and effect should this
condition not be met and, in that event, the Stipulation shall not be deemed to prejudice in any
way the positions of the parities with respect to the Action and each of the parties shall be
deemed to be in the position they were in prior to the execution of the Stipulation.



Terms of Escrow




     14. In the event the Court fails to approve the Settlement or if an appeal of the Order and
Final Judgment is taken, upon entry of an order reversing the Order and Final Judgment, the



 









 







Escrow Agent shall immediately thereafter, subject to the notice provisions contained herein
release to the Defendants the Escrow Items above, which include:




	 	a.	 	The duly executed Note and Judgment;
	 
	 	b.	 	The sum of $800,000; and
	 
	 	c.	 	The Escrow Common Stock.





     15. In the event the parties obtain final Court approval of the Settlement, the following
terms and conditions shall apply to the Escrow Items:




	 	a.	 	The Escrow Agent shall immediately following the granting of
final Court approval, subject to the notice provisions contained herein,
release from escrow and deliver to Squire, Sanders & Dempsey, L.L.P., counsel
for Spectrum, the Note and Judgment;
	 
	 	b.	 	The Escrow Agent shall immediately following the granting of
final Court approval, subject to the notice provisions contained herein,
release from escrow and deliver to AF&T the sum of $800,000, as partial payment
of their attorneys’ fees and expenses; and
	 
	 	c.	 	The Escrow Common Stock shall remain in escrow with the Escrow
Agent subject to the following terms and conditions:






	 	i.	 	The Escrow Common Stock shall not be pledged or
used in any respect to secure any debts or obligations aside from
Defendants’ obligations hereunder;
	 
	 	ii.	 	Defendants may direct the Escrow Agent to
release shares of Escrow Common Stock to Spectrum for the purpose of
satisfying the Second and Final Payments; provided, however, that all
payments to AF&T shall be payable in U.S. dollars;
	 
	 	iii.	 	In the event the Defendants fail to satisfy
their obligations concerning either the Second or Final payments, AF&T
and/or Spectrum may immediately following the date such




 









 






	 	 	 	payments are due direct the Escrow Agent to either release Escrow
Common Stock to each of them respectively in an amount sufficient to
satisfy any obligations to them, with such Common Stock to be valued
in accordance with the closing market price on the date of release or
release to each of them respectively proceeds from the disposition of
Escrow Common Stock, if any, in an amount sufficient to satisfy any
obligations to them.





     16. Any direction given to the Escrow Agent to release any Escrow Items and/or proceeds shall
be served on the Escrow Agent and counsel to the parties hereto in the manner described below for
the service of notice.



     17. In the event the Escrow Agent is directed and/or required under this Settlement Agreement
to release any Escrow Items and/or proceeds, the Escrow Agent shall promptly serve notice on
counsel for each of the parties hereto of the Escrow Agent’s intent to release such Escrow Items
and/or proceeds.



     18. In the event any party hereto objects to the release of Escrow Items and/or proceeds, they
shall notify the Escrow Agent accordingly in the manner provided for herein within seven days of
the date of service of the Escrow Agent’s notice of intent to release Escrow Items and/or
proceeds. In the event the Escrow Agent does not receive a timely notice of objection, the Escrow
Agent shall release the Escrow Items and/or proceeds as directed and/or required. In the event the
Escrow Agent receives a timely notice of objection, the Escrow Agent shall not release the Escrow
Items and/or proceeds and shall continue to hold the Escrow Items and/or proceeds until otherwise
directed by joint notice from the parties hereto or by a final, non-appealable judgment, order or
court decree. Any dispute that may arise concerning the release of Escrow Items or the proceeds
thereof shall be subject to the continuing exclusive jurisdiction of the Court from which a
resolution of the dispute shall be sought. If a dispute should arise concerning the Escrow Items
and/or proceeds, the Escrow Agent may deposit the Escrow Items and/or proceeds with the clerk of
the Court and shall notify the parties hereto accordingly.



 









 





     19. By signing this Stipulation on the place indicated on the signature page, the Escrow Agent
agrees to the terms and conditions of escrow set forth in the Stipulation.



     20. The Escrow Agent shall not be liable to any of the parties hereto for any expense, loss or
damage suffered by or occasioned by reason of any action taken or omitted to be taken by the Escrow
Agent pursuant to this Agreement or in connection therewith unless caused by the willful default of
the Escrow Agent, in which event the extent of the liability of the Escrow Agent shall be limited
to the market value of the Escrow Fund at the date of discovery of the loss and in no circumstances
shall the Escrow Agent be liable for any special, general, or consequential damages, even if the
Escrow Agent has been advised of the possibility of such damages. For purposes of this Agreement,
Escrow Agent shall include its parents, associates, employees and agents.



Notice




     21. Any notice, direction, and/or demand to be given or made by the parties hereunder shall
be served by facsimile transmission and overnight delivery upon counsel for the parties hereto and
upon the Escrow Agent as applicable.



Miscellaneous




     22. The administration of the Settlement, enforcement of its terms and decisions concerning
any disputes that may arise under the Stipulation, whether relating to questions of law and fact,
shall be subject to the continuing jurisdiction of the Court. Notwithstanding the foregoing,
Spectrum may file and/or record the Note and Confession of Judgment with a state or county agency,
department or office designated for such purposes.



     23. This Stipulation and all negotiations, statements, proceedings, and documents related to
it are not, and shall not be construed to be, an admission by any of the parties respecting the
validity or the invalidity of any of the claims asserted in the Action, or of the liability of any
party with respect to any such claims or any alleged wrongdoing whatsoever, and shall not be
offered by any party or person for any evidentiary purpose, including as an



 









 







admission of any such liability or wrongdoing or for the validity or invalidity of any of the
claims in the Action or any other action.



     24. This Stipulation shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.



     25. Without further order of the Court, the parties may agree to reasonable extensions of time
to carry out any of the provisions of this Stipulation.



     26. This Stipulation constitutes the entire agreement of the parties with respect to the
subject matter hereof and may not be amended, or any of its provisions waived, except by a writing
executed by all of the parties hereto.



     27. This Stipulation may be executed in one or more counterparts, all of which shall be
considered on and the same agreement, and shall become effective when such counterparts have been
signed by counsel for each of the parties and delivered to counsel for the other parties.



     28. This Stipulation shall be considered to have been negotiated, executed, delivered and
wholly performed in the State of New York, and shall be construed and enforced in accordance with,
and governed by the laws of the State of New York without giving effect to that state’s choice of
law principles.



	 	 	 	 	 	 	 
	DATED: November 17, 2005	 	ABRAHAM FRUCHTER & TWERSKY LLP

One Penn Plaza, Suite 2805

New York, NY 10119

Tel: (212) 279-5050

Fax: (212) 279-3655
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 /s/ Mitchell M.Z. Twersky	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Mitchell M.Z. Twersky*	 	 
	 

	 	 	 	     Ximena Skovron	 	 
	 

	 	 	 	     (*Admitted Pro Hac Vice)	 	 






 









 






	 	 	 	 	 	 	 
	 	 	LERACH COUGHLIN STOIA GELLER
RUDMAN & ROBBINS LLP
	 	 	197 S. Federal Highway, Suite 200

Boca Raton, FL 33432-4946

Tel: (561) 750-3000

Fax: (561) 750-3364	 	 
	 
	 	 	 	 	 	 
	 	 	Counsel for Plaintiff Todd Augenbaum	 	 
	 
	 	 	 	 	 	 
	 	 	ZUCKERMAN SPAEDER LLP	 	 
	 	 	1800 M Street, N.W.

Washington, DC 20036

Tel.: (202) 778-1800

Fax: (202) 822-8106	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Graeme W. Bush	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Graeme W. Bush	 	 
	 

	 	 	 	     (Admitted Pro Hac Vice)	 	 
	 
	 	 	 	 	 	 
	 	 	ZUCKERMAN SPAEDER LLP	 	 
	 	 	201 South Biscayne Boulevard

Miami, FL 33131

Tel: (305) 358-5000

Fax: (305) 579-9749	 	 
	 
	 	 	 	 	 	 
	 	 	Counsel for Defendants Robert Genovese, BG
Capital Group, Ltd., and as Escrow Agent	 	 
	 
	 	 	 	 	 	 
	 	 	SQUIRE, SANDERS & DEMPSEY LLP
	 	 	1201 Pennsylvania Ave., N.W.

Washington, DC 20004-0407

Tel: 202-626-6600	 	 
	 	 	Fax: 202-626-6780	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 /s/ James P. Murphy	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     James P. Murphy	 	 
	 

	 	 	 	     (Admitted Pro Hac Vice)	 	 






 









 






	 	 	 	 	 	 	 
	 	 	SQUIRE, SANDERS & DEMPSEY LLP	 	 
	 	 	200 South Biscayne Boulevard, Suite 4000

Miami, FL 33131-2398	 	 
	 	 	Tel: (305) 577-7078	 	 
	 	 	Fax: (305) 358-7001	 	 
	 
	 	 	 	 	 	 
	 	 	Counsel for Spectrum
Sciences & Software Holding 
  Corp.