Boston Communications Group (BCGI) Settles Patent Litigation, SEC Starts Informal Inquiry into Company Stock Option Grants

July 21, 2006 3:40 PM EDT
Boston Communications Group, Inc. (NASDAQ: BCGI) has signed a definitive settlement and license agreement settling and dismissing, with prejudice, Freedom Wireless' patent litigation against BCGI and its carrier customers, including its co-defendants.

The terms of the settlement and license agreements have been finalized, and the settlement is conditioned upon the entry of orders vacating certain orders and judgments in the U.S. District Court for the District of Massachusetts. The license agreement allows bcgi to continue business, including the sale of its real-time prepaid billing product, without the burden of any infringement claim by Freedom Wireless.

Pursuant to the settlement agreement, BCGI will pay to Freedom Wireless $55.3 million in full and final settlement of all claims against bcgi through June 30, 2006, including $12.6 million that will be a prepayment of royalties under the license agreement. The prepayment is anticipated to cover bcgi's royalty obligations to Freedom Wireless for the period from July 1, 2006, through approximately Feb. 28, 2007. The total settlement to be paid collectively by all of the defendants to Freedom Wireless is $87 million. As part of the settlement, bcgi's co-defendants have agreed to release BCGI from its indemnification obligations to such parties.

Separately, BCGI announced today that Staff of the Securities and Exchange Commission had contacted it by telephone regarding an informal inquiry relating to certain option grants made between 1998 and 2002. The Board of Directors has retained outside counsel which, along with bcgi, has begun to review bcgi's historical option grants practices. The results of that review will be reported by outside counsel to a Special Committee of the Board.

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