FACTNet settles Scientology lawsuit
[March 19, 1999]

SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

    This Settlement Agreement and Mutual General Release ("Agreement") is made as of the 19th day of March, 1999, by and between FACTNet, Inc., a Colorado corporation, ("FACTNet"), Lawrence Wollersheim, as an individual, ("Wollersheim"), Robert Penny as an individual, ("Penny"), on the one hand, and Bridge Publications, Inc., ("BPI"), and Religious Technology Center, ("RTC"), on the other hand. Each of the above named entities and individuals is herein after referred to as "the parties". The parties enter into this Agreement in recognition of the following:

A. Certain disputes have arisen among the parties concerning their respective legal rights and obligations, which disputes have resulted, and are likely to continue to result, in litigation, and create the potential of future litigation if they are not resolved.

B. Among the consequences of those disputes has been litigation in the form of the action entitled Bridge Publications Inc. v. FACTNet, Inc., et al. Civil Action Number 95-B-2143 pending in the United States District Court for the District of Colorado ("BPI v. FACTNet").

C. The parties, recognizing the expense, vagaries, and uncertainties of protracted litigation, have agreed to resolve their disputes, to compromise their claims, and to memorialize their respective rights, duties, responsibilities and obligations.

D. In full satisfaction of any and all disputes and claims, and in consideration of the exchange of full, general, and mutual releases, and upon the terms and conditions, the premises and promises, and the covenants stated below, the parties agree as follows:

I.     Undertakings of FACTNet, Wollersheim & Penny Within 30 days of the execution of this Agreement by all parties, FACTNet, Wollersheim and Penny shall:

A. Return to counsel of record herein for BPI all documents in whatever form, including but not limited to copies, notes, digests, summaries, extracts, computer discs and media (collectively "document") known as the "Advanced Technology" of the Scientology religion.

B. Return to counsel of record herein for BPI all other copyrighted documents, the copyrights of which are claimed by any of the "Scientology Related Entities" (all entities and organizations now or hereafter affiliated or associated with the Scientology Religion and all of the past, present, and future officers, directors, trustees and representatives thereof), to be owned by or licensed by or to any of them, ("Scientology Copyrighted Materials"), other than any published work legally purchased by or given to FACTNet, Wollersheim or Penny.

C. Return to counsel of record herein for BPI all documents produced by RTC and BPI in the BPI v. FACTNet case that are in their possession, custody or control, or in the possession of their attorneys, or which have been given to experts, including but not limited to the financial records provided to defendants in that action.

D. Retrieve and return to counsel of record herein for BPI, all Advanced Technology or copyrighted documents that have been given to counsel or any expert.

E. Execute the Consent to Entry of a Final Judgment and Permanent Injunction in the BPI v. FACTNet case in the form annexed to this Agreement as Attachment 1. However, BPI and RTC shall not take any steps to execute or collect upon said judgment except as set forth at Paragraph V below.

II.    Future Copyright Infringement

FACTNet, Wollersheim and Penny expressly covenant that neither they nor any person or entity acting on their behalf now has or will ever knowingly have possession, custody, or control of any of the Advanced Technology of Scientology in any form nor commit, encourage or approve any conduct constituting copyright infringement of Scientology Copyrighted Materials of the Scientology Related Entities.

III.     General Releases

A. BPI hereby releases and forever discharges FACTNet from "any and all claims" they may have against FACTNet, from the beginning of time to and including the effective date of this agreement, save for the Final Judgment being entered contemporaneously with the execution of the Agreement.

B. FACTNet hereby releases and forever discharges BPI from "any and all claims" which it may have against BPI, from the beginning of time to and including the effective date of this agreement.

C. FACTNet, Wollersheim and Penny hereby release and forever discharge BPI and RTC from all claims that were asserted or could have been asserted in or arising out of BPI v. FACTNet.

D. BPI and RTC hereby release and forever discharge FACTNet, Wollersheim and Penny from all claims that were asserted or could have been asserted in or arising out of BPI v. FACTNet.

E. The term "any and all claims" as used in subparagraphs A and B above, means and includes, but is not limited to, all claims of any kind, whether known or unknown, in law or in equity, anticipated or unanticipated, past or present, contingent or fixed, matured or inchoate, as of the effective date of this Agreement, save for said Final Judgment.

IV.     Representations and Warranties

The parties to this Agreement covenant, represent, warrant, and agree as follows:

A. The parties and each of them hereby acknowledge that they have been represented by counsel of their choice throughout the negotiations which resulted in the drafting, review and execution of this Agreement. The parties each acknowledge that it has executed this Agreement voluntarily, without coercion or duress of any kind, and upon the advice of counsel.

B. The parties have read this Agreement and understand its contents.

C. The parties have made such investigation of the facts pertaining to this Agreement, and of all the terms thereof and matters pertaining thereto, as they have deemed necessary.

D. Each party to this Agreement has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, it shall not be construed against any party on the basis of authorship.

E. All signatories to this Agreement represent that they are duly authorized and have the full power and authority to enter into this Agreement.

F. Each of the parties to this agreement represents and warrants that it has not sold, pledged, assigned, impaired or otherwise transferred to any third party any interest in any claim it may have against another party to this Agreement which is being released under this Agreement, and each agrees to indemnify and hold the other harmless from any liability, including actual costs of defense, resulting from having assigned or transferred such interest to a third party.

G. All representations, warranties and rights hereunder, shall be binding upon and inure to the benefit of their respective successors and assigns.

H. FACTNet, Wollersheim and Penny acknowledge that each and every representation, warranty, agreement and undertaking of them set forth in this Agreement is a separate material term and condition hereof, and a breach of any shall give rise to the remedies set forth herein.

V.     Execution Upon and Collection of Final Judgment

Contemporaneous with the execution of this Agreement, there is being entered with the Federal District Court for the District of Colorado in Denver, the Final Judgment and Permanent Injunction which provides, inter alia, for Final Judgment against FACTNet in the amount of One Million dollars ($1,000,000.00) none of which amount shall be dischargeable in Bankruptcy.

    RTC or BPI may execute and collect upon said Judgment, against FACTNet to the full extent permitted by law, but only if it is determined that FACTNet has committed an act constituting a violation or contempt of the Permanent Injunction entered contemporaneously.

VI.     Nature of the Agreement

The terms of this Agreement are contractual and not mere recitals. This Agreement may be amended only by a written instrument executed by all of the parties to this Agreement or their respective successors. In addition, the headings that are used herein are for the convenience of the Parties and do not form any part of the contractual terms of this Agreement.

VII.     Costs Attendant to Settlement

Each party to this Agreement shall bear its respective costs with respect to the negotiation, drafting, execution, and performance of this Agreement and all acts required to be undertaken by the terms thereof.

VIII.     Third Party Beneficiaries of this Agreement To the extent that this Agreement inures to the benefit of persons or entities not named parties or signatories hereto, this Agreement is hereby declared to be made for their respective benefits and shall be directly enforceable by each of them.

IX.    Additional Acts

All parties shall execute and deliver all documents and perform all further acts that may be reasonably necessary and useful to effectuate the purposes and provisions of this Agreement.

X.    Severability

In the event any provision of this Agreement is finally held to be void or otherwise unenforceable by the highest court of competent jurisdiction to address the matter, all remaining provisions shall remain in full force and effect.

XI.    Inconsistent Acts

All parties to this Agreement agree to forbear and refrain from doing any act or exercising any right, whether existing now or in the future, which act or exercise is inconsistent with this Agreement.

XII.    Modification or Revocation

This Agreement may not be modified or revoked except by a written instrument executed by all parties to this Agreement.

XIII.    Entire Agreements and Counterparts

This Agreement contains the entire agreement and understandings between the parties. There are no prior or contemporaneous oral agreements or undertakings, nor any other written agreements between the parties. This Agreement may be executed and delivered in counterparts by facsimile transmission or otherwise, each of which shall be deemed an original.

XIV.     Notices

Any and all notices permitted or required pursuant to the terms of this Agreement shall be in writing and shall be transmitted via prepaid United States mail, sent certified mail, return receipt requested, addressed as follows:

A. As to FACTNet, any and all such notices shall be addressed to:

Daniel A. Leipold, Esq. Leipold, Donohue & Shipe 960-A West Seventeenth Street Santa Ana, California 92706

B. As to Wollersheim, any and all such notices shall be addressed to:

Clifford L. Beem, Esq.
Beem & Mann
1 Norwest Center, Suite 3901
1700 Lincoln St.
Denver, Colorado 80203

C. As to Penny, any and all such notices shall be addressed to :

Robert Penny
C/O Ann Weber
6962 Miro Court
Longmont, Colorado 80501

D. As to the Scientology Related Entities, any and all such notices shall be addressed to:

Samuel D. Rosen, Esq.
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue, 31st Floor
New York, New York 10022

    Any said notice shall be effective upon receipt. Any change in the above persons or addresses to which notices under this Agreement are to be sent shall be accomplished by, and effective immediately upon, the service of notice of such change upon the other party hereto in accordance with the terms hereof.

    IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement, on the date first appearing above.

FACTNET, INC.

BRIDGE PUBLICATIONS, INC.

By: Its Director By: Its President

LEIPOLD, DONOHUE & SHIPE, LLP

PAUL, HASTINGS, JANOFSKY
& WALKER LLP

Daniel A. Leipold                 Barbara Reeves
Attorney for                      Attorney for
FACTNET, INC.                     BRIDGE PUBLICATIONS, INC.

LAWRENCE WOLLERSHEIM

RELIGIOUS TECHNOLOGY CENTER

As an individual                 By: Its President


ROBERT PENNY

As an individual

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 95-K-2143

BRIDGE PUBLICATIONS, a California non-profit corporation,

Plaintiffs,

V.

F.A.C.T.NET, INC., a Colorado nonprofit corporation; LAWRENCE WOLLERSHEIM, an individual; and ROBERT PENNY, an individual,

Defendants.

FINAL JUDGMENT AND PERMANENT INJUNCTION

Upon all of the proceedings in this action and pursuant to a Settlement Agreement dated March 19, 1999, and upon Defendant FACTNet's acknowledgement that Plaintiff's allegations are well founded, and good cause appearing therefor:

I. It is hereby ORDERED, ADJUDGED AND DECREED that defendant FACTNet, Lawrence Wollersheim, an individual and Robert Penny, an individual, their agents, servants, employees, attorneys and all persons in active concert or participation with them, or any of them, who receive actual notice of this Permanent Injunction are hereby and forever permanently enjoined and restrained from:

A. Directly or indirectly copying, publishing, reproducing, distributing, disseminating, performing, displaying or creating any works, including any derivative works of the Works as defined in paragraph C below, or any of them, in whole or in part, by any means in any media now known or hereafter developed in any time, place or fashion, and in particular from engaging in any such acts in, on or in connection with any computer, database, information service, electronic bulletin board service, network, storage facility, newsgroup, website, ftp site or archives, or other electronic bulletin board service, network or facility, including without limitation the transmitting or loading of any such materials onto, or downloading any copies of them from any such device, service, network or facility, and all such copies which defendants, their agents, servants, employees and attorneys and those in active concert or participation with them have caused to be copied or copied onto any such device, service, network or facility shall be removed as soon as reasonably possible, provided however, that nothing herein prohibits otherwise lawful "fair use" of the Works.

B. Causing, contributing to or inducing any other person to engage in any of the foregoing prohibited acts.

C. As used herein, the "Works" shall include but not be limited to the following works, whether or not registered or published.

(1) All Advanced Technology Works, including those set forth in Schedule 1, which is annexed hereto and incorporated herein by this reference.

(2) All Works by L. Ron Hubbard, irrespective of the medium (i.e., whether in the form of writing, recorded lecture, audio-visual reproduction or other medium);

(3) Any derivative Works, as "derivative work" is defined in 17 U.S.C. ? 101, based upon the writings of L. Ron Hubbard, whether now or later in existence;

(4) All Works published, created or owned by any Scientology organization now or hereafter in existence, including but not limited to Bridge Publications, Inc., New Era Publications International, Church of Scientology International or L. Ron Hubbard Library, or their successors or assigns, irrespective of the medium; and

(5) Any derivative of any of the foregoing, whether or not authorized, whether now or later in existence; and

II. The Court being advised in the premises hereby enters Final Judgment:

A. In favor of plaintiff, Bridge Publications, Inc., and against defendant FACTNet in the amount of One Million Dollars ($1,000,000.00), representing statutory damages under Section 504(c)(2), of the Copyright Act, 15 U.S.C. ?504(c)(2).

B. Defendant FACTNet's, Wollersheim's and Penny's counterclaims asserted herein are hereby dismissed with prejudice.

C. Each party shall bear its own costs.

Dated:______________________, 1999

____________________________
John L Kane, Jr.
Senior United States District Judge