Exhibit 10.3
SETTLEMENT AGREEMENT
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This Settlement Agreement is entered into by and between The Eastwind
Group, Inc., a Delaware Corporation ("Eastwind") and Xxxxx X. Xxxxxxx
("Xxxxxxx"). Centennial Printing Corporation, a Delaware Corporation
("Centennial"), and Centennial Racing, Inc., a North Carolina Corporation
("Racing") in settlement of a Demand for Arbitration filed with the American
Arbitration Association at No. 14Y4890010897 B/J, "The Eastwind Group, Inc. and
Xxxxx X. Xxxxxxx", and the counterclaim brought thereunder ("the Arbitration").
In consideration of the mutual covenants and agreements contained herein, the
parties stipulate and agree as follows:
1. The parties hereby acknowledge the existence of the Amended and
Restated Agreement and Plan of Merger By and Between Centennial
Printing Corporation, The Eastwind Group, Inc. and Centennial
Acquisition Corporation ("Merger Agreement") dated September 30,
1996, subject to the modifications and amendments more fully set
forth herein.
2. Worrall hereby relinquishes any and all right, title and
interest to the 9,000 shares of "Eastwind Series B Preferred
Stock", evidenced by Stock Certificate No. 1, and more fully
described in Sections 102(e) and 1.03(c) of the Merger Agreement
and in Exhibit 1.02 (e) "Certificate of Powers, Designations,
Preferences and Special Rights of Series B Preferred Stock" of
the Merger Agreement and any and all alleged payment in respect
thereto since execution of the Merger agreement, and further
agrees that the Settlement Agreement cancels all terms of the
Merger Agreement related to "Eastwind Series B Preferred Stock"
effective as of September 30, 1996. In lieu of a separate stock
power, Worrall hereby irrevocably constitutes and appoints
Xxxxxxx X. Xxxxxx, Secretary of Eastwind, attorney to transfer
those 9,000 shares of Eastwind Series B Preferred Stock to
Eastwind for cancellation on the books of said corporation.
3. Worrall hereby relinquishes any and all right, title and
interest to the "Floor Guarantee of Resale Price of Eastwind
Closing Shares" as more fully set forth at (S)5.08 of the Merger
Agreement, and agrees that this Settlement Agreement cancels all
terms of the Merger Agreement related to the "Floor Guarantee of
Resale Price of Eastwind Closing Shares" effective as of
September 30, 1996.
4. (a) Within ten (10) days of execution of the Settlement
Agreement, Eastwind shall issue and deliver to a Worrall a stock
certificate for Forty-Five Thousand (45,000) shares of Eastwind
common stock and all rights attendant thereto. These shares are
in addition to the 182,232 shares of Eastwind common stock
already registered to Worrall pursuant to inter alia,
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Section 1.03(e) and Exhibit 1.02(f) of the Merger Agreement.
Thereafter, commencing October 17, 1998, Worrall shall be
promised to sell or otherwise dispose of net more than Five
Thousand (5,000) of the additional Eastwind Shares in any thirty
(30) day period. There shall not be any cumulative carryover of
any number of shares less than 5,000 not sold in any particular
thirty (30) day period.
(b) As soon as practicably, and prior to September 30, 1998,
Eastwind will file with the Securities and Exchange Commission a
Registration Statement for the additional 45,000 shares of
Eastwind common stock issued
and delivered to Worrall hereunder, but only provided that
Eastwind is then eligible to use Form S-3 Registration Statement
for such purpose. To the extent consistent with this provision,
the terms of Section 5.07(c), (e) (i)-(iv), (f), (g), (h), (i),
(j), (k), (l), (m), (p), (q) of the Merger Agreement shall
govern the registration rights provided herein. However, Section
5.07(e) shall not apply if Eastwind becomes ineligible at any
time during the period specified in Section 5.07(e)(i) to
continue to utilize short form registration on Form S-3. At such
time, all registration obligations of Eastwind imposed by this
Settlement Agreement and the sections of the Merger Agreement
specified above shall cease. Moreover, the terms and limitations
set forth in Paragraph 4 are applicable only to the additional
45,000 shares of Eastwind Common Stock and the rights and
obligations of all parties with respect to the original 182,232
shares of Eastwind common stock remain as more fully set forth
in the Merger Agreement, as amended by paragraph 3 above.
5. (S)5.05 Promotion, of the Merger Agreement, and the Amendment
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and Restatement of Sponsorship Agreement dated October 1, 1996
obligated Centennial Printing Corporation ("Centennial") to pay
to Centennial Racing, Inc. ("Racing"), inter alia. One Hundred
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Thousand ($100,000.00) Dollars per year for three (3) years,
from the effective date. Worrall and Racing hereby relinquish
any and all right, title and interest he or Racing has to any
payments other than those heretofore paid as provided by these
agreements.
6. The parties hereby ratify and confirm the leases dated the first
day of July, 1995 between Xxxxx X. Xxxxxxx and Xxxxx Xxxxxx and
Centennial Printing Corporation for Xxxx 00, Xxxx 0 on a map of
Section 7, and lot 25, Unit 3 on a map of Section 10, Lake
Naomi, Pocono Pines, Tobyhanna Township, Monroe County,
Pennsylvania, as amended October 15, 1996.
7. (a) Eastwind hereby assumes liability and responsibility for
satisfaction of any and all sums due and owing for past
sales/use taxes by Centennial to the Commonwealth of
Pennsylvania, Department of Revenue, for Assessment No. 934-423-
000-000-0 dated April 28, 1997 ("sales/use tax claim") in the
original amount of Seven Hundred Seventy-one Thousand Nine
Hundred Forty-Seven and 23/100 Dollars ($771,947.23) plus any
additional interest and penalties. Eastwind shall have the right
to compromise and settle this sales/use tax claim with the
Commonwealth. Should no settlement be achieved with regard to
this sales/use tax claim, any sum finally determined to be due
and owing of the sales/use claim, shall be paid by, and remain
solely the obligation of, Eastwind and Centennial. Also, Worrall
shall receive a copy of any and all correspondence received by
Centennial or Eastwind or their counsel from the Commonwealth of
Pennsylvania regarding this sales/use tax claim.
(b) Eastwind will indemnify and hold harmless Worrall against
any claims, losses, damages and liability to the extent
permitted under Delaware corporate law (including reasonable
attorneys' fees incurred by Worrall in connection with civil
proceedings initiated by the Commonwealth to obtain satisfaction
of its assessments for the failure of Centennial to pay sales-
use taxes) for which Worrall may become subject, insofar as such
claim, loss, damages and liability arises out of or is based
upon Eastwind's or Centennial's failure to fully satisfy the
above-stated sales/use tax claim, including civil penalties and
interests, assessed in final assessment from the Commonwealth of
Pennsylvania, and does not exceed the total amount assessed by
the Commonwealth of Pennsylvania,
including penalties and interest, less any amount paid by
Eastwind or Centennial in satisfaction of said assessment.
Should the Commonwealth of Pennsylvania seek satisfaction of the
sales/use tax claim from Worrall, Worrall shall advise Eastwind
of such occurrence and provide Eastwind or its counsel with a
copy of any and all correspondence received by Worrall or its
counsel from the Commonwealth of Pennsylvania.
8. For and in consideration of the above-described covenants and
agreements, The Eastwind Group, Inc., Centennial Printing
Corporation, Xxxxx X. Xxxxxxx and Centennial Racing, Inc. hereby
release, remise and discharge each other, their heirs,
executors, administrators, predecessors, successors, insurers,
departments, divisions, parents, subsidiaries, subdivisions and
affiliated companies, and present and former directors,
officers, employees, shareholders, principals, agents, servants
and assigns, and any and all related persons, entities,
associations or corporations, whether herein referred to or not,
their predecessors, successors and assigns, of and from any
manner of claims, actions, causes of action, suits, debts, dues,
accounts, controversies, bonds, liabilities, demands,
obligations, liens, rights, damages, costs, expenses and/or
compensation, judgements and demands whatsoever, in law or in
equity, including any claims related to or resulting from any
representations or warranties contained in the Merger Agreement
other than as more fully provided herein, or any nature
whatsoever, that the releasing parties now have or than may
hereafter accrue to them, known, or unknown, foreseen or
unforeseen, related to or arising from, the facts alleged in the
Arbitration. The parties, specifically exclude from this Release
any claims arising out of a breach by Centennial, Eastwind,
Worrall or Centennial Acquisition Corporation, of the
obligations under the Closing Agreement dated October 17, 1996
for which Worrall and Xxxxx Xxxxxxx are intended beneficiaries.
9. It is expressly understood and agreed by and among the parties
that this Release represents a settlement and compromise of
disputed claims and that the payment of the consideration and
release and termination of rights mentioned in this Settlement
Agreement is not to be construed as an admission of liability on
the part of any party, as the liability claims that the
releasing parties have asserted in the arbitration are
specifically and vigorously denied and disputed by The Eastwind
Group, Inc. and Xxxxx X. Xxxxxxx.
10. The parties hereby stipulate and agree that this Settlement
Agreement can be entered as an award by the Board of
Arbitrators. If any party believes that any other party is in
violation of this Settlement Agreement, they shall first advise
the other party in writing of said breach and provide a ten (10)
day opportunity for cure by the allegedly offending party. If
any of the undersigned parties thereafter brings an action to
enforce any of the terms of this Settlement Agreement, that
action must be brought in accordance with Section 11.04
(Arbitration) of the Merger Agreement.
11. The undersigned hereby declare that this Settlement Agreement
has been read completely before signing, has been discussed with
legal counsel and is fully understood and voluntarily accepted
for the purpose of making a full and final compromise,
adjustment and settlement of any and all claims between Eastwind
and Worrall which were asserted, or which could have been
asserted, in the Arbitration or which are in any way related to
the facts or occurrences which were or could have been alleged
therein, and for the express purpose of
precluding forever any further suits arising out of the facts or
occurrences which were or could have been alleged in the
Arbitration.
12. This Settlement Agreement is intended to bind and benefit
Eastwind, Centennial Printing Corporation, Worrall, and
Centennial Racing, Inc. and is not intended to confer any
benefit upon any other person or entity except as specifically
provided herein.
13. In the event any portion of this Settlement Agreement shall be
determined by a court of competent jurisdiction, to be illegal,
invalid or unenforceable, such portion shall be severed and
deleted, and the remaining portions hereof shall remain, legal,
valid and enforceable, except that this paragraph shall not
apply if any portion of paragraphs 1 through 9 of this
Settlement Agreement is determined by a court of competent
jurisdiction to be illegal, invalid or unenforceable.
14. It is further understood and agreed that this Settlement
Agreement is the complete agreement between the parties, and
that there are no other written, or oral understandings or
agreements. This Settlement shall be binding upon and inure to
the benefit of the predecessors, successors, assigns, heirs,
executors, administrators, and legal representatives of the
respective parties.
15. This Settlement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which
together shall construe one and the same instrument.
16. This Settlement Agreement shall be construed and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania.
17. This Settlement Agreement shall become effective immediately
upon execution by the parties.
IN WITNESS WHEREOF, we have set our hands and seals this ___ day of
__________, 1998.
The Eastwind Group, Inc.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
____________________________ ______________________ (SEAL)
XXXXX X. XXXXXXX XXXXXXX X. XXXXXX
Senior Vice President and
Chief Financial Officer
Centennial Racing, Inc. Centennial Printing Corporation
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxx
_________________________ (SEAL) ______________________ (SEAL)
XXXXX X. XXXXXXX XXXXX XXXXXXX
President
