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EXHIBIT 10.32
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is entered into as of the 2nd
day of February, 1998, by and among Celebrity, Inc. a Texas corporation
("Celebrity"), India Exotics, Inc., a Texas corporation ("New IE"), and by
Surendra (Xxx) Xxxxxx, Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxxx as recipients (the
foregoing Khokhas being collectively known as the "Recipients") of liquidation
proceeds of India Exotics, Inc., a Missouri corporation (the Recipients and the
former corporation are referred to herein as "Old IE", as applicable), and
Xxxxxxxx Xxxxxx and Xxxxx Xxxxxx (collectively, with the Recipients, the
"Khokhas").
RECITALS
WHEREAS, New IE and Old IE are parties to that certain Consignment
Agreement (the "Consignment Agreement") dated February 7, 1995; and
WHEREAS, New IE and Xxxxxxxx Xxxxxx are parties to that certain Employment
Agreement dated February 7, 1995, as subsequently amended (the "X. Xxxxxx
Employment Agreement"), and New IE and Xxxxx Xxxxxx are parties to that certain
Employment Agreement dated February 7, 1995, as subsequently amended,
(collectively, with the X. Xxxxxx Employment Agreement, the "Employment
Agreements"); and
WHEREAS, New IE and the Khokhas are parties to that certain Noncompetition
Agreement dated February 7, 1995 (the "Noncompetition Agreement"); and
WHEREAS, New IE is the payor under that certain Promissory Note dated
February 7, 1995 in the original principal amount of $2,000,000 (as subsequently
amended, the "Purchase Note"); and
WHEREAS, certain disputes have arisen between Old IE and New IE concerning
the Consignment Agreement and between New IE and Xxxxxxxx Xxxxxx concerning the
X. Xxxxxx Employment Agreement; and
WHEREAS, New IE has not paid certain amounts which are currently overdue,
in default and payable to the Khokhas, including $125,000 in principal plus
accrued interest under the Purchase Note and $266,667 under the Noncompetition
Agreement, and New IE in addition owes other amounts to the Khokhas, including
an additional $125,000 in principal plus accrued interest which was scheduled
originally as due February 15, 1998 under the Purchase Note and $333,333 which
was scheduled originally as due January 1, 1999 under the Noncompetition
Agreement; and
WHEREAS, the parties hereto desire to settle and compromise all disputes
and to amend the Employment Agreements, the Noncompetition Agreement and other
agreements and obligations of the parties as prescribed herein:
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AGREEMENT
NOW, THEREFORE, in consideration of these premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Celebrity, New IE, Old IE and each of the Khokhas hereby agree as
follows:
1. General Payment Obligation. Upon execution of this Agreement by the
Khokhas and Old IE, and in accordance with the terms hereinafter set forth, New
IE and Celebrity jointly and severally promise and agree to pay to the order of
Xxxxxxxx Xxxxxx, as representative of the Khokhas and Old IE, an aggregate
principal amount equal to $1,000,000.00 (the "New Payment Amount") in
satisfaction of disputes and payment obligations relating to the Noncompetition
Agreement, the Purchase Note, the Consignment Agreement and Employment
Agreements to be paid in the manner specified below. Payment shall be as
designated by Old IE in the amount of $41,666.67 per month payable on the first
day of each of 24 consecutive months commencing April 1, 1998 and no interest
shall accrue on outstanding amounts of the New Payment Amount. An "Event of
Default" shall occur under this Agreement upon the failure of New IE or
Celebrity to make any payment when due of any amount due hereunder after the
expiration of 10 days following written notice of default from Old IE and/or
the Khokhas to New IE and Celebrity. Upon such Event of Default:
(a) the Noncompetition Agreement and the Employment Agreements shall
immediately be terminated, null and void and of no further force and effect, and
any and all obligations of the Khokhas under the Noncompetition Agreement and
Employment Agreements, including but not limited to the provisions of Section 1
of the Noncompetition Agreement and Section 5 of the Employment Agreements,
shall be waived and terminated, however, the obligation of New IE and Celebrity
to make payments hereunder shall remain in full force and effect; and
(b) the entire New Payment Amount shall immediately become due and
payable, without notice or demand. Old IE and Celebrity waive presentment,
demand for payment, protest and notice of nonpayment or dishonor and agree that
failure of New IE or the Khokhas to exercise any of its or their rights under
this Agreement shall not constitute a waiver thereof in that or any other
instance; and
(c) the outstanding balance of the New Payment Amount shall bear interest
at a rate equal to the lesser of (i) 15% per annum, (ii) the maximum rate of
interest permitted at such time under any federal law applicable to such
indebtedness, and (iii) the "indicated rate ceiling" in effect at such time as
that term is defined in Section (a)(1) of Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended.
2. Lease Payment Obligation. Upon execution of this Agreement by all of
the Khokhas and delivery to New IE of the original Purchase Note marked
"cancelled", New IE shall issue a check to Old IE in the amount of $6,530.00
(the "Payment") as the final payment due under that certain Standard Industrial
Lease Agreement dated February 7, 1995 between New IE and SK Properties, a
Missouri general partnership, and the Lease Termination Agreement which
terminates such lease (collectively, the "SK Lease"). Upon such payment, the SK
Lease shall
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terminate and neither party thereto shall have any further obligations or rights
thereunder. Also, Celebrity and New IE hereby agree to make good faith best
efforts to meet their payment obligations under the lease between New IE and
436 Investments, L.L.C. dated February 7, 1995, including any amendments
thereto.
3. Termination of Consignment Agreement. Old IE and New IE agree that,
notwithstanding any provision to the contrary contained in the Consignment
Agreement, the Consignment Agreement shall terminate on the date hereof and
neither party shall have any further obligations or rights thereunder.
Notwithstanding the foregoing, sales by X. Xxxxxx of merchandise described in
the Consignment Agreement are expressly permitted and shall not be deemed to be
a breach of the restrictive covenants of the Employment Agreements or the
Noncompetition Agreement.
4. Amendment of Noncompetition and Employment Agreement. Section 4.5 of
the X. Xxxxxx Employment Agreement (relating to reimbursement of expenses) is
hereby deleted in its entirety. Subject to the terms and conditions of this
Agreement, the Noncompetition Agreement and the Employment Agreements shall
remain in full force and effect until, and shall terminate upon, the earlier of
(i) the occurrence of an Event of Default under this Agreement, or (ii) February
6, 2000.
5. Waiver and Release.
(a) For and in consideration of the Payment, the New Payment Amount and
other good and valuable consideration, (i) Old IE hereby waives any and all
prior defaults under the Purchase Note and (ii) each of the Khokhas hereby
waives any and all defaults under the Noncompetition Agreement. Each of the
Khokhas hereby agrees that payment of the New Payment Amount to Xxxxxxxx Xxxxxx
in accordance with the terms set forth herein shall fully satisfy all payment
obligations of New IE to each of such parties under the X. Xxxxxx Employment
Agreement and the Noncompetition Agreement.
(b) For and in consideration of the Payment, the New Payment Amount and
other good and valuable consideration, Old IE and each of the Khokhas does
hereby release and forever discharge and acquit New IE and Celebrity and each of
their respective successors and assigns, its directors, officers, agents,
employees, legal representatives and any affiliated corporations, their
directors, officers, agents, employees and legal representatives, from any and
all causes of action, suits, liabilities, damages, demands and claims of any
nature whatsoever, whether in law or equity, whether known or unknown, and any
and all rights, duties, liabilities and obligations, whether presently
enforceable or enforceable in the future, by reason of any matter or cause
arising from the beginning of time to the date of this Agreement and hereafter
under the Noncompetition Agreement, the Employment Agreements, the Consignment
Agreement, the Purchase Note and the Purchase Agreement dated February 7, 1995
(the "Purchase Agreement") among New IE, Celebrity, Old IE and the Khokhas. In
particular, (i) Old IE releases all claims relating to (a) all sales of Stored
Goods (as defined in the Consignment Agreement) in connection with the
Consignment Agreement and (b) claims under the Purchase Note; (ii) each of
Xxxxxxxx Xxxxxx and Xxxxx Xxxxxx releases all claims relating to claims for
expenses in connection with
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the Employment Agreements; and (iii) each of the Khokhas releases all claims
under the Noncompetition Agreement.
(c) For and in consideration of the terms hereof, New IE and Celebrity
hereby release and forever discharge Old IE and the Khokhas and each of their
respective successors, assigns, agents and legal representatives and affiliated
persons from any and all causes of action, suits, liabilities, damages, demands
and claims of any nature whatsoever, whether in law or equity, whether known or
unknown, and any and all rights, duties, liabilities and obligations, whether
presently enforceable or enforceable in the future, by reason of any matter or
cause arising from the beginning of time to the date of this Agreement and
hereafter under the Noncompetition Agreement (except with respect to future
breaches if the Noncompetition Agreement is in effect at such time of breach),
the Employment Agreements (except with respect to future breaches if the
Employments Agreements are in effect at such time of breach), the Consignment
Agreement and the Purchase Agreement, except to the extent set forth in Section
8.06(i) and Section 8.06(ii) of the Purchase Agreement.
(d) This release is intended to cover all claims of all types, whether
arising under common law, or the statutes or regulations of the State of Texas,
of any other state, or of the United States or any foreign country. This is to
be construed as the broadest possible type of general release, including without
limitation admiralty, antitrust, commission, compensation, copyright, contract,
patent, regulatory, royalty, securities, statutory, tort, trespass, warranty, or
any other claims.
6. Miscellaneous.
(a) Full Knowledge Voluntary Act. Each of the Khokhas and Old IE
represents and warrants that such party is executing this Agreement on his, her
or its own behalf and that such party is legally competent to do so and is
authorized to do so.
(b) Severability. Should any provision of this Agreement be declared or
determined by a court or tribunal to be invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby.
(c) Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretations of the Agreement.
(d) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto, supersedes all oral agreements and undertakings with respect
to the subject matter thereof, and the terms hereof are contractual and not a
mere recital.
(e) Governing Law. THIS SETTLEMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS MADE IN THAT STATE.
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(f) Court Costs Attorneys' Fees. In the event of any breach of this
Agreement, the aggrieved party shall be entitled to recover from the party who
breaches, in addition to any other relief provided by law, such costs and
expenses as may be incurred by the aggrieved party, including court costs,
attorneys' fees and all other costs and expenses, taxable or otherwise,
reasonably necessary to defend against, or seek an abatement or injunction
against an action or proceeding, or to establish or maintain the applicability
or validity of this Agreement, or any provision hereof, or to prosecute any
counterclaim or cross-claim based on any such action or proceeding.
(g) Survivability. This Agreement and all the provisions hereof shall
continue perpetually and shall benefit and bind the predecessors, successors,
heirs, assigns and employees, agents and representatives, if applicable, of each
of the parties hereto.
(h) Amendment. This Agreement may not be amended, altered, modified or
changed in any way except in writing signed by all parties in the Agreement.
(i) Counterparts. This Agreement may be signed in counterparts and binds
each party immediately upon that party's execution.
0) Authority of Officers. Each of New IE and Celebrity represents and
warrants that their respective officers executing this Agreement have the power
and authority to execute and deliver this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of New IE and Celebrity.
(k) UCC-3 Termination Statement. Upon execution of this Agreement by New
IE and Celebrity, Old IE will execute and deliver a UCC-3 Termination Statement
to New IE in order to terminate the financing statement currently on file
listing Old IE as the secured party and New IE as the Debtor.
(1) Payment Designation. Celebrity and New IE agree that amounts to be
paid pursuant to Section 1 of this Agreement shall, at the written request of
the Khokhas, be paid to each of the Khokhas in amounts as designated by the
Khokhas.
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
INDIA EXOTICS, INC., a Texas corporation
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Vice President
CELEBRITY, INC., a Texas corporation
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Executive Vice President
Xxxxxxxx Xxxxxx, individually
and as a Recipient
/s/ XXXXXXXX XXXXXX
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Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx, individually
and as a Recipient
/s/ XXXXXXXX XXXXXX
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Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, individually
and as a Recipient
/s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
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Xxxxx Xxxxxx, individually
/s/ XXXXX XXXXXX
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Xxxxx Xxxxxx
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