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EXHIBIT 10.34
AGREEMENT
This Agreement is made as of May 5, 1999 among The Hallwood Group
Incorporated, a Delaware corporation ("HWG"); Epsilon Trust, a trust formed
under the laws of the Island of Jersey, Channel Islands ("Epsilon") and Xxxxx X.
Xxxxx, an individual resident of Jumby Bay Island, Antigua ("Xxxxx").
RECITALS
HWG is a diversified holding company that holds equity interests in several
companies;
Epsilon holds 305,196 shares of HWG's common stock, par value $0.10 per
share ("HWG shares");
Xxxxx holds options to purchase 18,600 HWG shares at an exercise price of
$11.75 per share and options to purchase an additional 18,600 HWG shares at an
exercise price of $26.06 per share;
HWG holds units representing limited partner interests in Hallwood Energy
Partners, L.P. ("HEP"), which in turn owns shares of common stock in Hallwood
Consolidated Resources Corporation ("HCRC");
HEP and HCRC have proposed a consolidation into Hallwood Energy Corporation
("HEC"), a newly formed Delaware corporation, which is expected to be effected
in the second quarter of 1999;
HWG, Epsilon and Xxxxx mutually desire to separate their interests;
The Board of Directors of HWG have determined that the separation of HWG's
interests from Epsilon's and Xxxxx'x as provided in this Agreement is in the
best interests of HWG and its shareholders.
AGREEMENT
1. Conditions to Closing. The parties agree that, upon satisfaction of the
following conditions, the remaining transactions contemplated by this Agreement
shall be effected as promptly as practicable. The date that those transactions
are completed is referred to as the "Closing Date."
1.1 Refinancing of HWG's 7% Debentures.
(a) HWG currently has outstanding $14,090,000 principal amount of 7%
Collateralized Senior Subordinated Debentures Due July 31, 2000 (the "7%
Bonds").
(b) HWG is currently attempting to refinance or replace the 7% Bonds
with other financing on terms that are satisfactory to HWG.
(c) The refinancing shall have been completed.
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1.2 HEC Consolidation. The proposed consolidation of HEP and HCRC into HEC
shall have been completed.
1.3 Third Party Approvals. All consents and approvals of third parties
shall have been obtained, including the consent of First Union National Bank
referred to in Section 5.3 below.
2. HWG Transfer of Assets to Epsilon Trust. On the Closing Date, HWG shall
transfer to Epsilon:
2.1 82,608 units of Hallwood Realty Partners, L.P. ("HRP");
2.2 360,000 shares of common stock of HEC, par value $0.01 per share (the
"HEC shares");
2.3 All of the outstanding stock of Condominium Hotel and Resort
Management, Inc. and Integra Resort Management, Inc. (which in turn owns all of
the stock of C-34 Holdings, Inc. and Enclave Resort, Inc.), including all of
HWG's rights to all condominium hotel projects currently in process
(collectively, "CHARM").
3. HRP and HEC Options.
3.1 Xxxxx currently holds options to purchase 17,200 units of limited
partner interest in HRP, options to purchase 85,000 units of HEP, and options to
purchase 53,000 shares of HCRC.
3.2 The parties acknowledge and agree that, as provided in the Merger and
Asset Contribution Agreement dated as of December 15, 1998, as amended, Xxxxx'x
options to purchase units of HEP and shares of HCRC are to be canceled in
exchange for a cash payment equal to the total positive difference between the
market price at the completion of the consolidation for the units of HEP and
shares of HCRC, on the one hand, and the exercise price per unit or share of the
options.
3.3 The parties acknowledge and agree that the general partner of HRP has
determined that Xxxxx'x resignation as a director referred to in Section 6.1
below is as a result of his disability, and therefore that, pursuant to HRP's
1995 Unit Option Plan, Xxxxx'x options will expire 12 months after his
resignation.
3.4 Xxxxx acknowledges and agrees that all options to purchase units of HRP
that he holds, and all units acquired on the exercise of those options will be
subject to Sections 6.2, 6.3, 6.4 and 6.5 of this Agreement.
4. Epsilon's and Xxxxx'x Transfers to HWG. On the Closing Date, in
consideration of the mutual agreements of the parties:
4.1 Epsilon shall surrender to HWG for cancellation the 305,196 HWG shares
held by Epsilon;
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4.2 Xxxxx shall surrender to HWG for cancellation the options to purchase
37,200 HWG shares held by Xxxxx.
5. Covenants and Agreements of HWG. Effective on the Closing Date, except with
respect to Section 5.3 which is effective on the signing of this Agreement, HWG
covenants and agrees that:
5.1 Continuing Payment.
(a) Until the first to occur of (a) a sale by HWG of its interests in
Hallwood Commercial Real Estate, LLC ("HCRE") and Hallwood Realty, LLC ("HRC")
or (b) the exercise of the option pursuant to Section 6.6 of this Agreement, HWG
will pay (the "Section 5.1 Payment") to Epsilon, within 30 days after the end of
each fiscal quarter ending after the Closing Date, the lesser of (x) 20% of the
Net Cash Flow of the Hallwood Group Realty Segment for the preceding quarter, or
(y) the sum of $125,000.
(b) For purposes of this Section, the Net Cash Flow of the Hallwood
Group Realty Segment means the sum of "Total operating cash flow" and "Total
other changes" reflected on the Combined Statements of Cash Flows of Hallwood
Commercial Real Estate, LLC and Hallwood Realty, LLC for the relevant period, on
a basis consistent with past practice. For purposes of determining the Net Cash
Flow, personnel costs and payments to affiliates shall be deducted only to the
extent that such costs and payments are consistent with past practice.
5.2 Sale of Interests. On any sale by HWG of its interests in HCRE and HRC,
HWG will pay to Epsilon 20% of the price attributable to HCRE and HRC, up to 20%
of $18,000,000. On HWG making such payment to Epsilon, HWG's obligation to make
the payments required by Section 5.1 shall immediately cease.
5.3 HWG Efforts. HWG will use all commercially reasonable efforts to effect
the refinancing referred to in Section 1.1, to obtain as promptly as possible
the consents of third parties to the transactions contemplated by this
Agreement, and to obtain as promptly as possible the release of the HEC shares
referred to in Section 2.2 and the HRP units referred to in Section 2.1 from the
security interest and negative pledge in favor of First Union National Bank
pursuant to the Amended and Restated Credit Agreement dated as of November 14,
1997.
5.4 Benefits. In consideration for Epsilon's shares of HWG and Xxxxx'x
surrender of options to purchase HWG shares, HWG will continue to carry Xxxxx on
all group life, health and hospitalization plans in which he currently
participates, and to pay the premiums for such plans, to the extent permitted by
the terms of those plans and applicable law. HWG itself shall not have any
obligation to pay to Xxxxx or his beneficiaries any of the benefits provided
under any of those plans.
6. Covenants and Agreements of Epsilon and Xxxxx. Effective on the Closing
Date, Epsilon and Xxxxx covenant and agree that:
6.1 Xxxxx'x Resignations. Xxxxx hereby resigns all positions as director
and officer of HWG, HEC, HRP, Hallwood GP, Inc., HCRC, HCRE, HRC and their
affiliates.
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6.2 Irrevocable Proxy.
(a) Epsilon and Xxxxx hereby irrevocably constitute and appoint HWG
the sole and exclusive and true and lawful proxy of the undersigned, with full
power of substitution and resubstitution, to vote (or give written consent with
respect to) in the name, place and stead of the Xxxxx and Epsilon, with all
powers that Xxxxx or Epsilon would possess if personally present, all the HEC
shares and all the units of HRP that Epsilon or Xxxxx are or will be after the
Closing Date entitled to vote at any annual or special meeting of equityholders
of HEC or HRP or in respect of any action to be taken by written consent in lieu
of any such meeting, and at any postponements or adjournments of any meeting, on
any and all matters in and according to HWG's sole discretion, and to exercise
all of Epsilon's and Xxxxx'x rights to call meetings of the equityholders of HEC
or HRP.
(b) This irrevocable proxy is made pursuant to this Agreement and is
coupled with an interest, is irrevocable, and will survive the death,
incompetence and disability of either or both of Epsilon and Xxxxx.
(c) Epsilon and Xxxxx agree to execute and deliver to HWG, HEC and HRP
such additional documents and take such additional actions as HWG may reasonably
request to effectuate or further secure and protect the rights of HWG under the
foregoing proxy.
6.3 HWG Right to Purchase.
(a) Until six months after the Closing Date, HWG shall have the option
at any time and from time to time to purchase from Epsilon and Xxxxx all or any
of the HEC shares and HRP units owned by them and all or any of the options to
purchase HRP units owned by them.
(b) To exercise the option to purchase the HEC shares, HRP units or
options to purchase HRP units, HWG shall give Epsilon and Xxxxx written notice
at the addresses below, specifying the number of HEC shares, HRP units and
options to purchase HRP units to be purchased, the date the sale is to be
completed, which shall be at least five business days after the date the notice
is delivered, and the calculation of the purchase price. On or before the date
specified in the written notice to Epsilon and Xxxxx, HWG shall deliver to Xxxx
Xxxxxx, Xxxxxxx & Xxxxxxxxx, Suite 3200, 0000 Xxxx Xxx., Xxxxxx, Xxxxx 00000, a
certified or cashier's check or funds by wire transfer the purchase price for
the exercise of the option.
(c) Upon receiving the written notice of exercise from HWG, Epsilon
and Xxxxx shall deliver to Xxxx Xxxxxx, at the address above, on or before the
date specified in the written notice from HWG, certificates representing,
together with stock powers executed in blank for, the HEC shares and HRP units
to be purchased and the option agreement representing the options to be
purchased.
(d) Upon receipt of the purchase price, the certificates, the stock
powers and the option agreement, Xxxx Xxxxxx shall promptly disburse the
purchase price to Epsilon or Xxxxx, as appropriate, and the certificates, the
stock powers and option agreement to HWG.
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(e) The purchase price for each of the HEC shares and the HRP units
shall be the Fair Value of HEC shares and HRP units. The Fair Value of the HEC
shares shall be the average closing sales price of the HEC shares on the Nasdaq
National Market for the 20 days preceding the exercise of the option on which
sales of the HEC shares occurred on the Nasdaq National Market, all as reported
in the daily editions of the Wall Street Journal. The Fair Value of the HRP
units shall be the average closing sales price of the HRP units on the American
Stock Exchange for the 20 days preceding the exercise of the option on which
sales of the HRP units occurred on the American Stock Exchange, all as reported
in the daily editions of the Wall Street Journal.
(f) The purchase price for the options to purchase each of the HRP
units shall be the difference between the Fair Value of the HRP units as
described in paragraph 6.3(e) and the exercise price of the options.
6.4 Transfer of HEC Shares, HRP Units and Options.
(a) No Transfer for Six Months. Epsilon and Xxxxx agree that neither
of them will sell, transfer, assign, or otherwise dispose of (a "Transfer") any
HEC shares or HRP units until at least six months after the Closing Date. This
provision does not restrict Xxxxx'x ability to exercise any of the options to
purchase HRP units, but the units acquired upon such exercise shall be subject
to this provision. This provision does not restrict Epsilon's or Xxxxx'x right
to pledge or hypothecate the HEC shares, HRP units or the options to purchase
HRP units, but the person to whom such shares, units or options are pledged or
hypothecated must agree to be bound by the provisions of this Section 6.4.
(b) Sales of HEC Shares and HWG Right of First Refusal After Six
Months. After six months from the Closing Date, Epsilon and Xxxxx shall have the
right to Transfer the HEC shares, but HWG shall have a right of first refusal to
purchase the HEC shares on the same terms that Epsilon or Xxxxx propose to
Transfer the shares, under the procedure described in paragraph (d), below.
(c) Sales of HRP Units and HWG Right of First Refusal After Six Months.
After six months from the Closing Date, Epsilon and Xxxxx shall have the right
to Transfer the HRP units, subject to the following restrictions:
(i) Epsilon and Xxxxx may sell an aggregate of up to 10,000 HRP
units in any 12 month period, subject to the further limitations in this
paragraph (c).
(ii) Epsilon and Xxxxx may sell no more than a total of 33,000 HRP
units.
(iii) Epsilon and Xxxxx may not sell any HRP units if a court of
competent jurisdiction has entered an order prohibiting or preventing a sale to
HWG or to its affiliates.
(iv) HWG shall have a right of first refusal to purchase the HRP
units on the same terms that Epsilon or Xxxxx propose to Transfer the shares,
under the procedure described in paragraph (d), below.
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(v) The restrictions in paragraphs (i), (ii) and (iii) above shall
be effective until such time as a final, non-appealable order of judgement or
dismissal is entered in the Gotham Litigation or the Gotham Litigation is fully
and finally settled by consent of the parties. After that time Epsilon and Xxxxx
may Transfer the HRP units subject only to the right of first refusal provided
in paragraph (iv). For purposes of this paragraph, Gotham Litigation means that
certain litigation in the Delaware Chancery Court, New Castle County, styled as
Gotham Partners, X.X. x. Xxxxxxxx Realty Partners, L.P. and Hallwood Really
Corporation (C.A. No. 15578) and Gotham Partners, X.X. x. Xxxxxxxx Realty
Partners, L.P., et al. (C.A. No. 15754) and any future action involving
substantially the same parties and substantially the same claims.
(d) First Refusal Procedure.
(i) If at any time beginning six months after the Closing Date
Epsilon or Xxxxx (the "Seller") desire to Transfer the HEC shares or HRP units
as permitted by this Agreement, then the Seller shall, not less than 10 business
days prior to the date (the "First Refusal Closing Date") of the proposed
Transfer, deliver a written notice (the "Notice") to HWG containing the
following information:
(A) The number of HEC shares or HRP units proposed to be
Transferred (the "Offered Shares").
(B) The terms and conditions of the proposed Transfer,
including the identity of the proposed transferee(s) and the per share price to
be charged (if any) for the Offered Shares and the type and nature of the
consideration to be received therefor. If the Seller intends to offer the
Offered Shares through "market" transactions on Nasdaq or the American Stock
Exchange, it shall so state and shall include in the notice any restrictions or
conditions to be imposed on such sales.
(C) An affirmative offer by the Seller to transfer the Offered
Shares to HWG at a price (the "Offer Price") equal to the total cash price plus
the fair market value of any consideration other than cash offered in the
proposed transfer for the Offered Stock. If the intended method of sale is
through market transactions on Nasdaq or the American Stock Exchange, the Offer
Price shall be the closing sales price of the Offered Shares on the Nasdaq
National Market or the American Stock Exchange for the 20 days preceding the
First Refusal Notice Date, as reported in the daily editions of the Wall Street
Journal.
The date that the Notice is received by HWG shall constitute the First
Refusal Notice Date.
(ii) HWG shall have the sole and exclusive option to acquire all
of the Offered Shares in accordance with the provision of the Notice for a
period of five business days from the First Refusal Notice Date. HWG may
exercise such option by giving written notice of exercise to the Seller within
the five business days. The option may be exercised only if HWG elects to
purchase all of the Offered Shares.
(iii) If HWG exercises its option to purchase the Offered Shares,
then on or before the First Refusal Closing Date, HWG or its assignee shall
deliver to Xxxx Xxxxxx, at the
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address above, a certified or cashier's check or funds by wire transfer in the
amount of the Offer Price and the Seller shall deliver to Xxxx Xxxxxx, at the
address above, certificates representing the Offered Shares, together with stock
powers executed in blank with respect to the Offered Shares. Upon receipt of the
Offer Price, the certificates and the stock powers, Xxxx Xxxxxx shall promptly
disburse the Offer Price to Epsilon or Xxxxx, as appropriate, and the
certificates and stock powers to HWG or its assignee.
(iv) If HWG does not exercise its option to purchase the Offered
Shares, then the Seller shall be permitted to Transfer the Offered Shares at any
time during the 60 days beginning on the First Refusal Closing Date in strict
conformity with the terms and conditions and for the consideration set forth in
the Notice.
(e) Any Transfer of HEC shares or HRP units that is not made in
compliance with this Section 6.4 shall be void.
(f) Epsilon and Xxxxx acknowledge and agree that:
(i) The HEC shares and HRP units are "restricted securities" as
that term is defined in SEC Rule 144, the resale of these HEC shares and HRP
units is restricted by federal and state securities laws and, accordingly, the
HEC shares and HRP units must be held indefinitely unless their resale is
subsequently registered under the Securities Act or an exemption from such
registration is available for their resale.
(ii) Certificates now or hereafter issued for the HEC shares and
HRP units may bear a legend substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR AN OPINION
(SATISFACTORY TO THE ISSUER) OF COUNSEL (SATISFACTORY TO THE ISSUER)
THAT REGISTRATION IS NOT REQUIRED.
(iii) Any resale of the HEC shares and HRP units by them must be
registered by the issuer under the Securities Act (and any applicable state
securities law) or be effected in circumstances that, in the opinion of counsel
for the issuer at the time, create an exemption or otherwise do not require
registration under the Securities Act (or applicable state securities laws).
(iv) The HEC shares and HRP units are being transferred to them
pursuant to the exemption from registration contained in Sections 4(1) and 4(2)
of the Securities Act and that the issuers are relying upon the representations
made in this Agreement as the basis for claiming the exemption.
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(v) In the event the HEC shares and HRP units or any portion
thereof are subsequently Transferred, Epsilon and Xxxxx agree to execute,
deliver and file all such papers, documents and instruments as may be required
by the SEC and any state securities commission to qualify the transfer for an
exemption from registration under the Securities Act, or any applicable state
securities laws, respectively, to the extent that such papers, documents and
instruments may be necessary or appropriate for such transfer. Epsilon and Xxxxx
agree to furnish the issuer with a copy of all such papers, documents and
instruments, and, in addition, will furnish the issuer with any other
information that the issuer may reasonably require to ensure that no subsequent
transfer or disposition of the HEC shares and HRP units is in violation of the
Securities Act or any applicable state securities laws.
(g) To permit the sales to third parties contemplated by this Section,
HWG agrees that upon receiving a written request from Epsilon or Xxxxx at any
time beginning five months after the Closing Date, HWG will use its best efforts
to cause the HEC shares and HRP units to be registered for resale with the
Securities and Exchange Commission and applicable state securities authorities.
The parties agree to enter into all agreements and execute all documents
customary in connection with such registration. The costs of the registration
will be at HWG's expense, but all selling expenses shall be borne by the Seller.
6.5 HRP Units Subject To Court Order. If a final, non-appealable order of
judgement is entered in the Gotham Litigation other than pursuant to a
settlement with the consent of the parties, the HRP units owned by Epsilon and
Xxxxx at such time will be subject to such order to the same extent as any HRP
units owned by HWG. If the Gotham Litigation is fully and finally settled by
consent of the parties, the HRP units owned by Epsilon and Xxxxx at such time
will be subject to such order to the same extent as any HRP units owned by HWG,
but only if Epsilon and Xxxxx consent to such settlement.
6.6 HWG Option to Purchase Section 5.1 Payment.
(a) At any time beginning two years after the Closing Date and
ending five years after the Closing Date, HWG shall have the option to purchase
from Epsilon, at a price of $3,000,000, the Section 5.1 Payment.
(b) If it intends to exercise the option to purchase the Section 5.1
Payment, HWG shall give Epsilon and Xxxxx written notice at the addresses below
of its intent. Within five business days after the date the notice is delivered,
Epsilon and Xxxxx shall notify HWG in writing of the address to which a
certified or cashier's check is to be delivered or the routing information for
the account to which the funds are to be transferred by wire transfer. To
exercise the option to purchase the Section 5.1 Payment, HWG shall deliver the
funds to the address or the account specified by Epsilon and Xxxxx, or, if five
business days have elapsed and Epsilon and Xxxxx shall not have specified an
address or account, then to the address for Epsilon indicated below.
(c) Upon delivery of the purchase price for the option, the obligations
of HWG to make payments pursuant to Sections 5.1 and 5.2 shall immediately
cease.
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7. Mutual Releases.
7.1 Release by HWG. HWG hereby fully, finally, completely and generally
releases Epsilon and Xxxxx, their affiliates and their respective officers,
directors, partners, employees, shareholders, attorneys, agents and
representatives from any and all claims, actions, demands and/or causes of
action of whatever kind and character, whether known or unknown, arising from,
relating to, or in any way connected with Xxxxx'x employment with HWG, the
termination of his employment with HWG, his service as an officer of HWG, and
the ownership by Epsilon and Xxxxx of HWG shares or options to purchase HWG
shares, HRP units, HEP units and HCRC shares, and HWG further agrees not to take
any legal action or file any suit, action, or proceeding against Epsilon and
Xxxxx, their affiliates and their respective officers, directors, employees,
shareholders, attorneys, agents or representatives related thereto, or (except
to provide evidence to the extent required by law) aid, assist or abet any party
pursuing a suit, action or proceeding against any of them. This release shall
not affect the rights of HWG or Epsilon and Xxxxx'x continuing obligations under
this Agreement or any related documentation.
7.2 Release by Epsilon and Xxxxx. Epsilon and Xxxxx hereby fully, finally,
completely and generally release HWG, its affiliates and their respective
officers, directors, partners, employees, shareholders, attorneys, agents and
representatives from any and all claims, actions, demands, losses, liabilities,
expenses, obligations and/or causes of action, of whatever kind or character,
whether known or unknown, arising from, relating to, or in any way connected
with Xxxxx'x employment with HWG, the termination of his employment with HWG,
his service as an officer of HWG and the ownership by Epsilon and Xxxxx of HWG
shares or options to purchase HWG shares, HRP units, HEP units and HCRC shares,
and Epsilon and Xxxxx further agree not to take any legal action or file any
suit, action, or proceeding against HWG, its affiliates and their respective
officers, directors, employees, shareholders, attorneys, agents or
representatives related thereto, or (except to provide evidence to the extent
required by law) aid, assist or abet any party pursuing a suit, action or
proceeding against any of them. This release shall not affect the rights of
Epsilon and Xxxxx or HWG's continuing obligations under this Agreement or any
related documentation.
7.3 Each party understands and agrees that this Agreement constitutes a
valid and enforceable waiver and release, and creates enforceable rights as
described herein, and acknowledges that this waiver and release is made
knowingly and voluntarily.
8. Additional Covenants of HWG.
8.1 Nondisclosure. HWG understands that it has developed and been exposed
to highly confidential information and trade secrets of CHARM and its affiliates
and that maintenance by CHARM of its Confidential Information to the fullest
extent possible is extremely important. Accordingly, HWG covenants that, (a)
except with the prior written consent of CHARM, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone (except HWG's
authorized representatives), any confidential information to which HWG has been
or shall become privy relating to the business of CHARM or any of its
affiliates. The provisions of this Section shall not apply to any information to
the extent (i) it is or shall become generally known to the public (without the
commission of a tortious act), (ii) it is or shall become available in trade or
other
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publications, or (iii) HWG is required by law to disclose such information to
any person, including in any filings with the Securities and Exchange
Commission.
8.2 Comments About HWG and Affiliates. HWG agrees that it will not say,
publish or do any act or thing that disparages or casts Epsilon, Xxxxx, CHARM,
their affiliates or their officers, directors, employees, agents and/or
representatives in an unfavorable light, or which could result in injury to any
such person's reputation. Without first consulting with Xxxxx and obtaining the
prior written approval as to the timing and content of any proposed statements
and/or announcements, HWG shall make no public statements or announcements
regarding Xxxxx'x past employment by HWG or any of the matters set forth herein
except to say that: "For personal reasons, Xx. Xxxxx has resigned as an officer
and director of The Hallwood Group Incorporated and its affiliated companies and
subsidiaries," and to describe this Agreement to the extent required by
applicable securities or other laws.
9. Additional Covenants of Epsilon and Xxxxx.
9.1 Nondisclosure. Epsilon and Xxxxx understand that they have developed
and been exposed to highly confidential information and trade secrets of HWG and
its affiliates and that maintenance by HWG of its Confidential Information to
the fullest extent possible is extremely important. Accordingly, Epsilon and
Xxxxx covenant that, (a) except with the prior written consent of HWG, he shall
at all times keep confidential and not divulge, furnish or make accessible to
anyone (except HWG's authorized representatives), any confidential information
to which Epsilon or Xxxxx has been or shall become privy relating to the
business of HWG or any of its affiliates. The provisions of this Section shall
not apply to any information to the extent (i) it is or shall become generally
known to the public (without the commission of a tortious act), (ii) it is or
shall become available in trade or other publications, or (iii) Epsilon or Xxxxx
is required by law to disclose such information to any person, including in any
filings with the Securities and Exchange Commission.
9.2 Comments About HWG and Affiliates. Epsilon and Xxxxx agree that they
will not say, publish or do any act or thing that disparages or casts HWG, HEC,
HRP, their officers, directors, employees, agents and/or representatives in an
unfavorable light, or which could result in injury to any such person's
reputation. Without first consulting with HWG and obtaining the prior written
approval as to the timing and content of any proposed statements and/or
announcements, Epsilon and Xxxxx shall make no public statements or
announcements regarding Xxxxx'x past employment by HWG or any of the matters set
forth herein except to say that: "For personal reasons, I have resigned as an
officer and director of The Hallwood Group Incorporated and its affiliated
companies and subsidiaries," and to describe this Agreement to the extent
required by applicable securities or other laws.
10. Dispute Resolution. Any dispute between the parties to this contract,
including but not limited to disputes concerning the enforcement, breach, or
interpretation of this agreement, shall be resolved by arbitration under the
then-current rules of the American Arbitration Association. Discovery in any
arbitration shall be limited to document requests and interrogatories, but shall
not include depositions. Venue of any arbitration shall be in Dallas, Texas. The
arbitrators' award may be entered as a judgment by a court of competent
jurisdiction.
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11. Miscellaneous provisions
11.1 Binding Nature. EACH OF THE PARTIES ACKNOWLEDGES THAT IT HAS CAREFULLY
READ THIS AGREEMENT, THAT IT FULLY UNDERSTANDS ITS PROVISIONS AND ITS FINAL AND
BINDING EFFECT, AND THAT IT IS SIGNING THIS AGREEMENT VOLUNTARILY. THIS
AGREEMENT AND ALL OF THE RIGHTS OF HWG UNDER THIS AGREEMENT WILL INURE TO THE
BENEFIT OF AND WILL BE ENFORCEABLE BY HWG'S SUCCESSORS AND ASSIGNS. THIS
AGREEMENT AND ALL OF THE RIGHTS OF EPSILON AND XXXXX UNDER THIS AGREEMENT WILL
INURE TO THE BENEFIT OF AND WILL BE ENFORCEABLE BY THEIR PERSONAL OR LEGAL
REPRESENTATIVES, EXECUTORS, ADMINISTRATORS, SUCCESSORS, HEIRS, DISTRIBUTEES,
DEVISEES AND LEGATEES.
11.2 Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, in whole or in part, then both parties
will be relieved of all obligations arising under such provision, but only to
the extent it is illegal, unenforceable or void. The intent and agreement of the
parties to this Agreement is that this Agreement will be deemed amended by
modifying any such illegal, unenforceable or void provision to the extent
necessary to make it legal and enforceable while preserving its intent, or if
such is not possible, by substituting therefor another provision that is legal
and enforceable and achieves the same objectives. Notwithstanding the foregoing,
if the remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision not so
affected will be enforced to the extent permitted by law.
11.3 Waiver. No delay or omission by either party to this Agreement to
exercise any right or power under this Agreement will impair such right or power
or be construed as a waiver thereof. A waiver by either of the parties to this
Agreement of any of the covenants to be performed by the other or any breach
thereof will not be construed to be a waiver of any succeeding breach thereof or
of any other covenant contained in this Agreement. All remedies provided for in
this Agreement will be cumulative and in addition to and not in lieu of any
other remedies available to either party at law, in equity, or otherwise.
11.4 Payment of Taxes. Epsilon and Xxxxx agree that they will be solely
responsible for and will indemnify and hold HWG harmless from, any federal or
state income tax, FICA, or other tax liability, if any, resulting from the
payments made to Epsilon and Xxxxx pursuant to this Agreement, or other sums
previously paid to Xxxxx during his employment by HWG, except as may have been
withheld by HWG in accordance with this Agreement. Epsilon and Xxxxx also agree
to pay to HWG or permit HWG to withhold in cash sums sufficient to permit HWG to
comply with any withholding requirements it may have in connection with the
payments to be made to Epsilon or Xxxxx pursuant to this Agreement.
11.5 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY
PRINCIPLE OF CONFLICT-OF-LAWS THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF
ANY OTHER JURISDICTION. THE PARTIES HERETO SUBMIT THEMSELVES TO THE JURISDICTION
OF THE TRIBUNALS OF THE STATE OF TEXAS, INCLUDING WITHOUT LIMITATION, THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, EXPRESSLY WAIVING ANY
VENUE TO WHICH THEY MAY BE ENTITLED BY THEIR PRESENT OR FUTURE DOMICILES.
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11.6 Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given and received when delivery to the addressees'
address is confirmed. The addresses for notice are as follows:
If to Xxxxx: Xxxxx X. Xxxxx
Brook House, Jumby Bay
Long Island, St. John's
Antigua, West Indies
Telecopy: (000) 000-0000
With a Copy to: Xxxxx X. Xxxxx
Xxxxx Hospitality Services
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
If to HWG: The Hallwood Group Incorporated
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
With a Copy to: Xxxxxxx X. Xxxxxxxx
Le Roccabella
00, Xxxxxx Xxxxxxxxx Xxxxx
Xxxxx-Xxxxx XX00000
Principality of Monaco
Telecopy: 011 377 93 50 7145
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11.8 Equitable Remedies. Epsilon, Xxxxx and HWG acknowledge that none of
them would enter into this Agreement but for the agreements of the others
contained herein and that the others would be irreparably injured by a violation
of the provisions of this Agreement and that none would have adequate remedy at
law in the event of such violation. Therefore, Epsilon, Xxxxx and HWG
acknowledge that injunctive relief, specific performance or any other
appropriate equitable remedy (without bond or other security being required) are
appropriate remedies to enforce compliance by the other of its obligations
hereunder.
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11.9 Entire Agreement. This Agreement constitutes the entire agreement
among the parties to this Agreement with respect to the subject matter of this
Agreement and there are no understandings or agreements relative to this
Agreement which are not fully expressed in this Agreement. All prior agreements
between the parties with respect to the subject matter of this Agreement,
whether oral or written, are expressly superseded by this Agreement. No change,
waiver or discharge of this Agreement will be valid unless in writing and signed
by the party against which such change, waiver or discharge is to be enforced.
11.10 Nonadmission. This Agreement and compliance with this Agreement shall
not constitute or be construed as an admission by any party or any of its
affiliates or their respective officers, directors, partners, employees, agents,
partners, shareholders, associates, attorneys, representatives, or successors of
any wrongdoing or liability of any kind or an admission by any of them of any
violation of the rights of another, but, rather, such liability or wrongdoing is
expressly denied; nor shall this Agreement be admissible in any judicial,
administrative, or other proceeding or cause of action as an admission of
liability by any party or any of its affiliates or their predecessors,
successors, parent entities, subsidiaries, related or affiliated companies,
officers, directors, employees and assigns.
12. Nonliability of Jenkens & Xxxxxxxxx.
12.1 Drafting of Agreement. Each of the parties acknowledge and agree that
Xxxx Xxxxxx and Jenkens & Xxxxxxxxx have acted at the joint request of all of
the parties in preparing this Agreement and that Xxxx Xxxxxx and Jenkens &
Xxxxxxxxx have not acted as counsel to any of the parties separately in this
matter. Therefore, each of the parties agree that it has not relied on Xxxx
Xxxxxx or Jenkens & Xxxxxxxxx to negotiate or to advocate its interests in
opposition to the other parties. The parties further acknowledge that if for any
reason a dispute arises among the parties with respect to this Agreement,
neither Jenkens & Xxxxxxxxx nor Xxxx Xxxxxx will represent any of them in
connection with that dispute and that Xxxx Xxxxxx and Jenkens & Xxxxxxxxx would
be required to reveal to all parties all conversations with and information
given them by either party. The parties further agree that HWG is to be
responsible for paying the fees and expenses of Jenkens & Xxxxxxxxx in
connection with the preparation of this Agreement.
12.2 Actions as Escrow Agent.
(a) In their actions pursuant to Sections 6.3 and 6.4 of this
Agreement, Xxxx Xxxxxx and Jenkens & Xxxxxxxxx are collectively referred to in
this Section as the "Escrow Agent." The parties further agree that the Escrow
Agent shall not incur liability with respect to any action taken or suffered by
it in reliance upon any notice, direction, instruction, consent, statement or
other documents believed by it to be genuine and duly authorized, nor for other
action or inaction except its own willful misconduct or gross negligence. In all
questions arising under the Escrow Agreement, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent, the Escrow Agent shall not be liable to anyone. The Escrow
Agent shall not
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be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to it.
(b) The parties hereby, jointly and severally, agree to indemnify the
Escrow Agent for, and hold it harmless against, any loss, liability or expense
incurred without gross negligence or willful misconduct on the part of Escrow
Agent, arising out of or in connection with its carrying out of its duties
hereunder. HWG, on the one hand, and Epsilon and Xxxxx, on the other hand, shall
each be liable for one-half of such amounts. In no event shall the Escrow Agent
be liable for indirect, punitive, special or consequential damages.
(c) The Purchaser and the Company, jointly and severally, agree to
hold the Escrow Agent harmless from and against any taxes, assessments,
additions for late payment, governmental charges, including, without limitation,
withholdings or deductions or the failure to withhold or deduct the same, and
any liability for failure to obtain proper certifications or to properly report
to governmental authorities, including costs and expenses (including reasonable
legal fees and expenses), interest, penalties and other expenses, that may be
assessed against the Escrow Agent in any such payment or other activities under
this Agreement (each a "Liability"). The parties undertake to instruct the
Escrow Agent in writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement; provided, however, that the indemnity in the
foregoing sentence will not apply to the extent that a Liability results from
the Escrow Agent's gross negligence or willful misconduct, which shall include
failure to follow such written instructions.
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The parties have executed this Agreement effective as of the Effective
Date.
THE HALLWOOD GROUP INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EPSILON TRUST
By: /s/ Xxxxxxx Xxxxx and Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx and Xxxxx Xxxxxxx
----------------------------------
Title: authorized signatories
--------------------------------
/s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
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