EXHIBIT 10.36
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated January 22, 1997, by and among ALL AMERICAN
SEMICONDUCTOR, INC., a Delaware corporation ("All American"), ALL AMERICAN ADDED
VALUE, INC., a California corporation ("California Subsidiary"), and XXXXXX
XXXXXXXXX ("Xxxxxxxxx").
PRELIMINARY STATEMENT
All American, California Subsidiary, Colorado Subsidiary, Added Value
Electronics Distribution, Inc., A.V.E.D.-Rocky Mountain, Inc., and the Target
Stockholders (of which Xxxxxxxxx is one) entered into a Merger Purchase
Agreement dated as of October 31, 1995 and/or certain other agreements in
connection therewith and the closing thereof (collectively, the "Purchase
Agreement"), including an employment agreement between California Subsidiary and
Xxxxxxxxx (the "Employment Agreement"). In connection with the termination of
Xxxxxxxxx'x employment under the Employment Agreement, Xxxxxxxxx has requested
certain modifications to his covenants against competition made in the
Restrictive Covenant and the Employment Agreement. All American and California
Subsidiary have agreed to make such modifications, as set forth below, in
exchange for the agreements of Xxxxxxxxx set forth below.
NOW, THEREFORE, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used herein, which are not defined
herein, shall have the respective meanings ascribed to them in the Purchase
Agreement or, as applicable, the Employment Agreements.
2. ADDITIONAL CONSIDERATION. The obligation of All American to pay the
Additional Consideration to Xxxxxxxxx is hereby irrevocably and unconditionally
waived, released, canceled and terminated in its entirety, without any
obligation on the part of All American of California Subsidiary to pay Xxxxxxxxx
any compensation or consideration therefor.
3. NONCOMPETITION COVENANTS. The "Covenant-Not-To-Compete" set forth in
Section 2 of the Restrictive Covenant (with respect to Xxxxxxxxx only), and the
Covenant-Not-To-Compete set forth in Section 11 of the Employment Agreement,
shall be amended and restated in their respective entireties as follows:
(a) COVENANT-NOT-TO-COMPETE IN RESTRICTIVE COVENANT:
"2. COVENANT-NOT-TO-COMPETE. In view of (a) the Confidential
Information known to each Target Stockholder, (b) the substantial
consideration paid and payable to such Target Stockholder under or
pursuant to the Purchase
Agreement, and (c) the sale of the good will of the business
embodied in the Purchase Agreement, and as a material inducement to
Purchaser to consummate the Purchase Agreement, each Target
Stockholder covenants and agrees that such Target Stockholder shall
not, directly or indirectly, for and during the First Applicable
Period, (A) solicit the services of, or hire, directly or
indirectly, whether on his or her own behalf or on behalf of others,
any salesperson (whether an employee or independent contractor of
the Purchaser Group) or managerial or executive employee of the
Purchaser Group (or any of them) or who was employed or engaged by
the Purchaser Group (or any of them) at any time during the period
commencing one year prior to the date of Closing under the Purchase
Agreement and ending five years following the date of Closing under
the Purchase Agreement, or (B) obtain any interest in, any
employment with, or any right or engagement to participate in,
passively or actively, any enterprise, company or business which is
either an authorized distributor of electronic components or a
turnkey or kitting business relating to electronics manufacturing
anywhere within the continental United States (the "Geographical
Territory"), or (C) in any capacity, engage in any activity or
business, passively or actively, as an owner, participant, employee
or agent, competitive with the memory module and/or display
technology businesses of the Purchaser Group (or any of them) within
the Geographical Territory. The foregoing restrictions shall not
prevent a Target Stockholder from accepting employment with a
manufacturer's representative or a broker (a "broker" being defined
as a broker of electronic components that is not an authorized
broker or distributor for any manufacturer of electronic
components), provided that, in connection with any such employment,
such Target Stockholder does not participate, directly or
indirectly, in the solicitation of, or otherwise divert or attempt
to divert, any Key Account. A "Key Account" means any customer of
the Purchaser Group (or any of them) which has accounted for sales
of the Purchaser Group viewed as a whole of at least $50,000 in any
of calendar year 1993, 1994, 1995 or 1996 (viewed as of today) or,
on a rollingforward basis, in any of the three years preceding the
date on which the attempted solicitation or diversion first occurs.
The foregoing restrictions shall also not prevent a Target
Stockholder from accepting employment with a company which performs
turnkey or kitting services relating to electronics manufacturing,
provided that, in connection with such employment, such Target
Stockholder does not participate, directly or indirectly, in the
solicitation of, or otherwise divert or attempt to divert, any of
the following accounts of the Purchaser Group: Cognitive Solutions;
VL Labs; or any kitting or turnkey customers at any time handled out
of the Purchaser Group's Denver, Colorado office. Each Target
Stockholder acknowledges that the business of the Purchaser Group is
national in scope, that one can effectively compete with such
business in the Geographical Territory from anywhere within the
Geographical Territory, and that, therefore, such geographical area
of restriction is reasonable in the circumstances to protect the
Purchaser Group's legitimate business interests. For purposes
hereof, "Purchaser Group" means the All American Companies and all
of
2
their respective subsidiaries, parents and other Affiliates, whether
now or hereafter existing, including Added Value and Rocky Mountain,
and all of such entities' respective successors and assigns by
merger, sale, spin-off or otherwise."
(b) COVENANT-NOT-TO-COMPETE IN EMPLOYMENT AGREEMENTS:
"11. COVENANT-NOT-TO-COMPETE
In view of (a) the Confidential Information known to and to be
obtained by or disclosed to Employee (including, without limitation,
Employee's knowledge of, and familiarity and relationships with,
Employer's other employees and Employer's customers and suppliers),
(b) the know-how acquired and to be acquired by Employee, (c) the
substantial consideration paid and payable to Employee under the
Purchase Agreement, and to Employee under this Employment Agreement,
and (d) the sale of the good will of the business embodied in the
Purchase Agreement, and as a material inducement to Employer to
enter into this Employment Agreement and to employ Employee and to
pay to Employee the substantial compensation Employee will be
receiving, Employee covenants and agrees that, for as long as
Employee is employed by Employer and for a period of two (2) years
after the later of (i) the date Employee ceases for any reason to be
employed by Employer and (ii) the date Employee ceases to receive
any Salary (as severance pay or otherwise) from Employer, Employee
shall not, directly or indirectly, (A) solicit the services of, or
hire, passively or actively, whether on his own behalf or on behalf
of others, any salesperson (whether an employee or independent
contractor of the Purchaser Group) or managerial or executive
employee of the Purchaser Group (or any of them) or who was employed
or engaged by the Purchaser Group (or any of them) at any time
during the period commencing one year prior to the commencement of
the Employment Term and ending on the date of termination of
Employee's employment, or (B) obtain any interest in, any employment
with, or any right or engagement to participate in, directly or
indirectly, any enterprise, company or business which is either an
authorized distributor of electronic components or a turnkey or
kitting business relating to electronics manufacturing anywhere
within the continental United States (the "Geographical Territory"),
or (C) in any capacity, engage in any activity or business,
passively or actively, as an owner, participant, employee or agent,
competitive with the memory module and/or display technology
businesses of the Purchaser Group in the Geographical Territory. The
foregoing restrictions shall not prevent Employee from accepting
employment with a manufacturer's representative or a broker (a
"broker" being defined as a broker of electronic components that is
not an authorized broker or distributor for any manufacturer of
electronic components), provided that, in connection with any such
employment, Employee does not participate, directly or indirectly,
in the solicitation of, or otherwise divert or attempt to divert,
any Key Account. A "Key Account" means
3
any customer of the Purchaser Group (or any of them) which has
accounted for sales of the Purchaser Group viewed as a whole of at
least $50,000 in any of calendar year 1993, 1994, 1995 or 1996
(viewed as of today) or, on a rolling-forward basis, in any of the
three years preceding the date on which the attempted solicitation
or diversion first occurs. The foregoing restrictions shall also not
prevent Employee from accepting employment with a company which
performs turnkey or kitting services relating to electronics
manufacturing, provided that, in connection with such employment,
Employee does not participate, directly or indirectly, in the
solicitation of, or otherwise divert or attempt to divert, any of
the following accounts of the Purchaser Group: Cognitive Solutions;
VL Labs; or any kitting or turnkey customers at any time handled out
of the Purchaser Group's Denver, Colorado office. Employee
acknowledges that the business of the Purchaser Group is national in
scope, that one can effectively compete with such business in the
Geographical Territory from anywhere in the Geographical Territory
and that, therefore, such geographical area of restriction is
reasonable in the circumstances to protect Employer's legitimate
business interests. The covenants and restrictions contained in this
Section 11 are intended to be separate and divisible from, and
operate concurrently with, the similar covenants and restrictions
contained in the Restrictive Covenant and are each intended to be
separately enforceable. Any differences between the covenants and
restrictions contained herein and therein, such as with respect to
time period restrictions, are intentional. Nothing herein is
intended to diminish, nor shall diminish, Employee's obligation to
devote Employee's full-time working efforts to and for the benefit
of Employer, and to honor and discharge faithfully Employee's duty
of loyalty to Employer, while an employee of Employer. For purposes
hereof, "Purchaser Group" means the All American Companies and all
of their respective subsidiaries, parents and other Affiliates,
whether now or hereafter existing, including Added Value and Rocky
Mountain, and all of such entities' respective successors and
assigns by merger, sale, spin-off or otherwise."
Notwithstanding any of the foregoing set forth above in this Section 3
to the contrary, Xxxxxxxxx shall not be prohibited from accepting employment
similar to his employment with California Subsidiary, provided that, in
connection with such employment, Xxxxxxxxx does not participate, directly or
indirectly, in the solicitation of, or otherwise divert or attempt to divert,
any Key Account or any of the turnkey or kitting accounts referred to above.
This Agreement in no way modifies or alters the Restrictive Covenant
with respect to any other Target Stockholder or the employment agreement of any
other Target Stockholder.
4
4. RELEASE OF VOTING TRUST AND PLEDGE. The voting trust set forth in
the Voting Trust Agreement covering Xxxxxxxxx'x 50,779 All American Shares
received in the Mergers (but only covering Xxxxxxxxx'x, and not any other Target
Stockholder's, All American Shares) is hereby terminated. The 50,779 Pledged
Shares owned by Xxxxxxxxx (and only those Pledged Shares, and not the Pledged
Shares of any other Target Stockholder), which are the same 50,779 All American
Shares subject to the voting trust terminated above, are hereby released from
the lien thereon created under the Pledge Agreement. Within ten (10) business
days following the execution and delivery of this Agreement, All American shall
cause its stock transfer agent to deliver to Xxxxxxxxx an unlegended stock
certificate for said 50,779 All American Shares.
5. RELEASES AND COVENANTS NOT TO XXX.
(a) For and in consideration of the agreements herein of Xxxxxxxxx,
and the release given by Xxxxxxxxx below to the All American Group (as defined
below), and other valuable consideration received from or on behalf of
Xxxxxxxxx, the receipt of which is hereby acknowledged, each of All American and
California Subsidiary hereby remises, releases, acquits, satisfies, and forever
discharges Xxxxxxxxx of and from all, and all manner of, action and actions,
cause and causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever, at law or in equity, known or unknown, suspected
or unsuspected, asserted or unasserted, which All American or California
Subsidiary ever had, now has, or hereafter can, shall or may have, or which any
representative, successor, predecessor, or assign of All American or California
Subsidiary ever had, now has, or hereafter can, shall or may have against
Xxxxxxxxx arising from any matter or thing whatsoever, including, without
limitation, those arising or resulting from any past breach by Xxxxxxxxx of any
of his representations, warranties or covenants contained in the Purchase
Agreement, past acts or omissions of Xxxxxxxxx in connection with the
performance of his or her employment duties, the management, affairs, practices
or operations of Added Value or Rocky Mountain prior to the closing of the
Mergers, or prior injurious or defamatory statements made by Xxxxxxxxx;
provided, however, Xxxxxxxxx is not being released from his obligations under
the Restrictive Covenant (as hereby amended). Each of All American and
California Subsidiary further covenants and agrees never to institute or cause
to be instituted or continue prosecution of any suit or other form of action or
proceeding of any kind or nature whatsoever against Xxxxxxxxx arising from any
of the foregoing claims or causes of action which have been remised, released,
acquitted, satisfied and forever discharged.
(b) For and in consideration of the agreements of All American and
California Subsidiary set forth in this Agreement, and the release given by them
above to Xxxxxxxxx, and other valuable consideration received from or on behalf
of All American and California Subsidiary, the receipt of which is hereby
acknowledged, Xxxxxxxxx hereby remises, releases,
5
acquits, satisfies, and forever discharges each of All American and California
Subsidiary, each subsidiary, parent and other Affiliate of each of them, and
each successor, assign, officer, director, employee and agent of each of the
foregoing (collectively, the "All American Group") of and from all, and all
manner of, action and actions, cause and causes of action, suits, debts, dues,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims and demands whatsoever, at law or in equity, known
or unknown, suspected or unsuspected, asserted or unasserted, which Xxxxxxxxx
ever had, now has, or hereafter can, shall or may have, or which any
representative, successor, predecessor, or assign of Xxxxxxxxx ever had, now
has, or hereafter can, shall or may have, against the All American Group or any
member thereof arising from any matter or thing whatsoever, including, without
limitation, those arising or resulting from any past breach by the All American
Group (or any member thereof) of any of their respective representations,
warranties or covenants contained in the Purchase Agreement or past acts or
omissions of the All American Group (or any member thereof) in connection with
the performance of their respective obligations under the Employment Agreement
(and, in this regard, this release covers and releases any claims at law or in
equity with respect to Xxxxxxxxx'x employment with California Subsidiary,
including claims under any employment, discrimination, health or safety laws),
or which in any manner relate to the management, affairs, practices or
operations of any member of the All American Group or any decision, act or
omission of any kind taken or made by or on behalf of any member of the All
American Group, or any injurious or defamatory statements made by any member of
the All American Group. Xxxxxxxxx further covenants and agrees never to
institute or cause to be instituted or continue prosecution of any suit or other
form of action or proceeding of any kind or nature whatsoever against the All
American Group or any member thereof arising from any of the foregoing claims or
causes of action which have been remised, released, acquitted, satisfied and
forever discharged.
(c) It is the intention of the parties hereto in executing
this Agreement that this instrument shall be effective as a bar to each and
every claim, demand, or cause of action released hereby. Each party recognizes
that he or it may have some claim, demand, or cause of action against another
party of which he or it is totally unaware and unsuspecting, which he or it is
giving up by execution of this Agreement. It is the intention of the parties in
executing this instrument that it will deprive them of each such claim, demand
or cause of action. In furtherance of this intention, each party hereto
expressly waives any rights or benefits conferred by the provisions of Section
1542 of the Civil Code of the State of California, which provides as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
(d) Each party hereto acknowledges and represents that he or
it has consulted with legal counsel before effecting this settlement and
executing this Agreement and that he or it understands its meaning, including
the effect of Section 1542 of the California Civil Code, and
6
expressly consents that this Agreement shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to the release of unknown and unsuspected claims, demands, and causes
of action.
6. FURTHER ASSURANCES. Each party to this Agreement shall, at the
request of any other party to this Agreement, at its expense and without being
entitled to receive further consideration, execute and deliver all such
documents, and do all such acts and things, as may be reasonably required to
effectuate the terms and provisions of this Agreement.
7. MISCELLANEOUS PROVISIONS. The provisions of Sections 9.2, 9.3, 9.6
(provided that Xxxxxxxxx'x address for notice shall be the address set forth in
Schedule 1 to the Guaranty and Agreement, with a copy to Xxxxxxx X. Xxxxx, Esq.,
Xxxxxxx Coie, 1999 Avenue of the Stars, 9th Floor, Los Angeles, California
90067), 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.14, 9.15 and 9.17 of the Purchase
Agreement shall apply to this Agreement; provided, however, that this Agreement
is an independent agreement, and no provisions of the Purchase Agreement shall
be deemed incorporated herein.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written, or on the date shown below,
whichever is later.
ALL AMERICAN SEMICONDUCTOR, INC.
By: /s/ XXXXX X. XXXXXXXX /s/ XXXXXX XXXXXXXXX
---------------------------- ---------------------------
Xxxxx X. Xxxxxxxx, President XXXXXX XXXXXXXXX
ALL AMERICAN ADDED VALUE, INC.
By: /s/ XXXXX X. XXXXXXXX
----------------------------
Xxxxx X. Xxxxxxxx, President
7
