SETTLEMENT AND STOCK PURCHASE AGREEMENT
THIS SETTLEMENT AND STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
entered into on September 1, 2001, by and among EUROPEAN MICRO HOLDINGS, INC., a
Nevada corporation ("EMCC"), AMERICAN MICRO COMPUTER CENTER, INC., a
wholly-owned subsidiary of EMCC and a Florida corporation ("AMCC") XXXX X.
XXXXXXXXX and XXXX X. XXXXXXXXX (collectively, the "AMCC SHAREHOLDERS").
RECITALS:
A. On June 29, 1999, EMCC acquired in a merger (the "MERGER") all of the
outstanding capital stock of AMCC from the AMCC Shareholders. The terms of the
Merger are set forth in a Merger Agreement (the "MERGER AGREEMENT") dated as of
June 29, 1999, as amended by a letter agreement dated as of October 2, 2000.
B. Pursuant to the terms of the Merger, EMCC was obligated to pay the
Shareholders the sum of: (i) the Book Value Amount; plus (ii) 1998 Normalized
Earnings Payment Amount; plus (iii) the Earn-Out Amount, as such capitalized
terms are defined in the Merger Agreement.
C. As a result of restrictions imposed by SouthTrust Bank, EMCC's senior
lender, EMCC was unable to perform its obligations to the AMCC Shareholders
under the Merger Agreement. As a result of EMCC's failure to perform, on or
about February 20, 2001, EMCC delivered a Secured Promissory Note (each, a
"NOTE") to each Shareholder in the original principal amount of $823,712.00.
Each Note evidenced the amount due to each Shareholder for the Third Installment
(as defined in the Merger Agreement) and was secured by a Pledge and Security
Agreement (the "PLEDGE AGREEMENT") dated as of February 20, 2001. Each Note was
due in full within thirty (30) days of the satisfaction of the obligations owed
by EMCC to SouthTrust Bank.
D. On or about July 15, 2001, EMCC notified the AMCC Shareholders that
it would be unable to meet its obligations under each Note. On August 21, 2001,
EMCC satisfied its obligations to SouthTrust Bank. As a result, EMCC was no
longer contractually restricted from performing its obligations to the AMCC
Shareholders. On August 22, 2001, the AMCC Shareholders delivered written notice
to EMCC demanding payment of the outstanding amounts under the Notes as required
by the terms of the Pledge Agreement.
E. In order to settle their differences and to avoid litigation, the
parties hereto have agreed to enter into this Agreement, pursuant to which the
AMCC Shareholders will, among other things, (i) release EMCC from any
obligations under the Notes, (ii) release EMCC from its obligation to repay
$98,945 owed by EMCC to AMCC and (iii) release EMCC from its obligation to pay
past due salary of $37,500 and future salary to Xxxx X. Xxxxxxxxx.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual premises herein set forth
and certain other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. INCORPORATION OF RECITALS. Each of the recitals specified above is
true and correct and is incorporated herein by reference.
2. TERMINATION OF NOTES, OBLIGATIONS; TRANSFER OF CAPITAL STOCK.
2.1. On the date hereof, in consideration for the full satisfaction
of the (i) Notes and (ii) the obligation to repay $98,945 owed by EMCC to AMCC,
EMCC shall transfer and deliver to the AMCC Shareholders good and marketable
title to all outstanding shares of capital stock of AMCC (the "AMCC SHARES"), in
such denominations as may be specified by the AMCC Shareholders. On the date
hereof, AMCC shall endorse to the AMCC Shareholders (or deliver to the AMCC
Shareholders signed stock powers) any and all original stock certificates
evidencing AMCC Shares and shall deliver to the AMCC Shareholders any and all
original stock certificates so endorsed (or together with applicable stock
powers, as the case may be). All AMCC Shares shall be free and clear of all
liens, security interests and encumbrances of any kind or nature.
2.2. Each of the AMCC Shareholders and AMCC understand that except
as specifically set forth in this Agreement, none of EMCC or any other person
acting on its behalf is or will be making any representation or warranty,
express or implied, regarding the conduct, condition or operation of the assets
or business of AMCC.
3. TERMINATION OF EMPLOYMENT AGREEMENT. Xxxx X. Xxxxxxxxx and EMCC
hereby terminate in its entirety that certain Executive Employment Agreement
(the "EMPLOYMENT AGREEMENT") dated as of January 1, 1998 (including, without
limitation, Section 9 to the Employment Agreement), and neither party shall be
entitled to enforce any rights he or it may have thereunder. In exchange for
being released from his obligations under the Employment Agreement (including,
without limitation, Section 9 to the Employment Agreement), Xxxx X. Xxxxxxxxx
has agreed to release EMCC from its obligation to pay past due compensation of
$37,500, as well as all future compensation thereunder.
4. MUTUAL RELEASES.
4.1. RELEASE BY THE AMCC SHAREHOLDERS. Effective on the date hereof,
except for any rights that Xxxx X. Xxxxxxxxx has under (a) Section 13 of the
Employment Agreement or (b) that certain Indemnification Agreement (the
"INDEMNIFICATION AGREEMENT") dated as of January 1, 1998 between Xxxx X.
Xxxxxxxxx and EMCC., each AMCC Shareholder hereby releases, acquits and forever
discharges EMCC and EMCC's subsidiaries, affiliates, officers, directors,
agents, employees, servants, attorneys and representatives, as well as the
respective heirs, personal representatives, successors and assigns of any and
all of them (collectively, the "RELEASED EMCC PARTIES") from any and all claims,
demands, debts, actions, causes of actions, suits, contracts, agreements,
obligations, accounts, defenses, offsets and liabilities of any kind or
character whatsoever, known or unknown, suspected or unsuspected, direct or
indirect, in contract or in tort, in law or in equity, including without implied
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limitation, such claims and defenses as fraud, which either AMCC Shareholder
ever had, now have, or might hereafter have against the Released AMCC Parties,
for or by reason of any matter, cause of thing whatsoever which relates to, in
whole or in part, directly or indirectly, to: (i) the Merger; (ii) the Merger
Agreement; (iii) the Notes; (iv) the Pledge Agreement; (v) any written or verbal
agreements, contracts, instruments, documents or any other thing executed or
delivered in connection with the Merger, the Merger Agreement, the Notes or the
Pledge Agreement (collectively, the "TRANSACTION DOCUMENTS"); (vi) any course of
conduct or course of dealing related to the Transaction Documents or the
transactions contemplated thereby; (vii) any actions that have been or may be
taken by either AMCC Shareholder in connection with or related to the
Transaction Documents or the transactions contemplated thereby; (viii) anything
related to the conduct, condition or operation of the assets or business of EMCC
from June 29, 1999 up to and including the date hereof; and/or (ix) any rights
he may have under the Employment Agreement, but excluding any rights he may have
under (y) Section 13 of the Employment Agreement or (z) the Indemnification
Agreement.
4.2. RELEASE BY AMCC. Effective on the date hereof, AMCC and AMCC's
affiliates, officers, directors, agents, employees, servants, attorneys and
representatives, as well as the respective heirs, personal representatives,
successors and assigns of any and all of them, hereby releases, acquits and
forever discharges EMCC and EMCC's subsidiaries, affiliates, officers,
directors, agents, employees, servants, attorneys and representatives, as well
as the respective heirs, personal representatives, successors and assigns of any
and all of them (collectively, the "RELEASED EMCC PARTIES") from any and all
claims, demands, debts, actions, causes of actions, suits, contracts,
agreements, obligations, accounts, defenses, offsets and liabilities of any kind
or character whatsoever, known or unknown, suspected or unsuspected, direct or
indirect, in contract or in tort, in law or in equity, including without implied
limitation, such claims and defenses as fraud, which AMCC ever had, now have, or
might hereafter have against the Released EMCC Parties, for or by reason of any
matter, cause of thing whatsoever which relates to, in whole or in part,
directly or indirectly, to: (i) any and all Transaction Documents; (ii) any
course of conduct or course of dealing related to the Transaction Documents or
the transactions contemplated thereby; (iii) any actions that have been or may
be taken by AMCC in connection with or related to the Transaction Documents or
the transactions contemplated thereby; and/or (iv) anything related to the
conduct, condition or operation of the assets or business of AMCC from June 29,
1999 up to and including the date hereof.
4.3. RELEASE BY EMCC. Effective on the date hereof, EMCC and EMCC's
subsidiaries, affiliates, officers, directors, agents, employees, servants,
attorneys and representatives, as well as the respective heirs, personal
representatives, successors and assigns of any and all of them, hereby releases,
acquits and forever discharges each AMCC Shareholder and their respective heirs,
personal representatives, successors and assigns of any and all of them, and
AMCC and AMCC's subsidiaries, affiliates, officers, directors, agents,
employees, servants, attorneys and representatives, as well as the respective
heirs, personal representatives, successors and assigns of any and all of them,
(collectively, the "RELEASED AMCC SHAREHOLDER PARTIES") from any and all claims,
demands, debts, actions, causes of actions, suits, contracts, agreements,
obligations, accounts, defenses, offsets and liabilities of any kind or
character whatsoever, known or unknown, suspected or unsuspected, direct or
indirect, in contract or in tort, in law or in equity, including without implied
limitation, such claims and defenses as fraud, which EMCC ever had, now have, or
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might hereafter have against the Released AMCC Shareholder Parties, for or by
reason of any matter, cause of thing whatsoever which relates to, in whole or in
part, directly or indirectly, to: (i) any and all Transaction Documents; (ii)
any course of conduct or course of dealing related to the Transaction Documents
or the transactions contemplated thereby; (iii) any and all actions that have
been or may be taken by EMCC in connection with or related to the Transaction
Documents or the transactions contemplated thereby; (iv) anything related to the
conduct, condition or operation of the assets or business of AMCC from June 29,
1999 up to and including the date hereof; and/or (v) any rights it may have
under the Employment Agreement (including, without limitation, any rights it may
have under Section 9 of the Employment Agreement).
4.4. COVENANT NOT TO XXX. Each of EMCC, AMCC and the AMCC
Shareholders hereby agree not to commence, join in, prosecute or participate in
any suit or other proceeding in a position which is adverse to any other party
hereto arising directly or indirectly from any of the matters set forth in this
Section 4.
5. INDEMNIFICATION.
5.1. INDEMNIFICATION BY EMCC. EMCC shall jointly and severally
defend, indemnify and hold harmless each AMCC Shareholder, as well as the
respective heirs, personal representatives, successors and assigns of any and
all of them, and AMCC and AMCC's subsidiaries, affiliates, officers, directors,
agents, employees, servants, attorneys and representatives, as well as the
respective heirs, personal representatives, successors and assigns of any and
all of them, (hereinafter called "AMCC SHAREHOLDER INDEMNITEE") against and in
respect of any and all loss, damage, liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement (collectively, "AMCC
SHAREHOLDER LOSSES"), suffered or incurred by any AMCC Shareholder Indemnitee by
reason of or arising out of any claims, demands, actions, causes of actions and
suits, of any kind or character (including, without limitation, any derivative
claims) (collectively, "CLAIMS") related to the transaction contemplated by this
Agreement including, without limitation, any Claims to which any AMCC
Shareholder Indemnitee could have been entitled to indemnification under
applicable state law, EMCC's bylaws or under applicable insurance regarding past
acts or omissions as an officer or director of EMCC or AMCC.
5.2. DEFENSE OF CLAIMS.
(a) Each party seeking indemnification hereunder (an
"INDEMNITEE"): (i) shall provide EMCC (the "INDEMNITOR") written notice of any
Claim arising after the date hereof for which an Indemnitor may be liable under
the terms of this Agreement, within ten (10) days after such Claim arises and is
known to Indemnitee, and (ii) shall give the Indemnitor a reasonable opportunity
to participate in any proceedings and to settle or defend any such claim or
action. The expenses of all proceedings, contests or lawsuits with respect to
such Claims shall be borne by the Indemnitor. If the Indemnitor wishes to assume
the defense of such claim or action, the Indemnitor shall give written notice to
the Indemnitee within ten (10) days after notice from the Indemnitee of such
claim or action, and the Indemnitor shall thereafter assume the defense of any
such claim or liability, through counsel reasonably satisfactory to the
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Indemnitee, provided that Indemnitee may participate in such defense at their
own expense, and the Indemnitor shall, in any event, have the right to control
the defense of the claim or action.
(b) If the Indemnitor shall not assume the defense of, or if
after so assuming it shall fail to defend, any such claim or action, the
Indemnitee may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitee, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitee for the
amount of all expenses, legal and otherwise, incurred by the Indemnitee in
connection with the defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered against any
Indemnitee in any action covered by the indemnification hereunder, or any lien
attaches to any of the assets of any of the Indemnitee, the Indemnitor shall
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of the Indemnitor, an appeal is
taken under which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
Indemnitee is compelled to do so.
5.3. WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
6. MISCELLANEOUS.
6.1. NOTICES.
(a) All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon receipt if delivered in person, or upon the expiration of
four (4) days after the date sent, if sent by federal express (or similar
overnight courier service) to the parties at the following addresses:
(i) If to EMCC: European Micro Holdings, Inc.
0000 X.X. 000xx Xxxxxx, Xxxx X-00
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx,
Co-President
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With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
(ii) If to the Shareholders: Xx. Xxxx X. Xxxxxxxxx
0000 X.X. 000xx Xxxxxx, Xxxx X-00
Xxxxx, Xxxxxxx 00000
(b) Notices may also be given in any other manner permitted by
law, effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
6.2. SURVIVAL. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect after the date hereof.
6.3. COUNTERPARTS; INTERPRETATION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed by or on behalf
of all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular subsection or paragraph. References to
"including" means including without limiting the generality of any description
preceding such term. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person other than the parties
hereto any rights or remedies under or by reason of this Agreement.
6.4. GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Florida, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or federal
courts in Miami-Dade County, Florida, U.S.A. Each of the parties hereby
irrevocably submits to the jurisdiction of any state or federal court sitting in
Miami-Dade County, Florida. Each party hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action in Miami-Dade County, Florida.
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6.5. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, and successors.
6.6. PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are
intended to be limited to the extent necessary to render this Agreement legal,
valid and enforceable. If any terms of this Agreement not essential to the
commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof shall constitute their agreement with
respect to subject matter hereof and all such remaining terms shall remain in
full force and effect. To the extent legally permissible, any illegal, invalid
or unenforceable provision of this Agreement shall be replaced by a valid
provision which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
6.7. WAIVER. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, but only if
such waiver is evidenced by a writing signed by such party. No failure on the
part of a party hereto to exercise, and no delay in exercising, any right, power
or remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
6.8. HEADINGS. The headings as to contents of particular paragraphs
of this Agreement are inserted for convenience only and shall not be construed
as a part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
6.9. GENDER. Where the context requires, the use of the singular
form herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
6.10. ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
6.11. ATTORNEYS FEES. In the event of any litigation arising under
the terms of this Agreement, the prevailing party or parties shall be entitled
to recover its or their reasonable attorneys fees and court costs from the other
party or parties.
6.12. OPPORTUNITY TO HIRE COUNSEL; ROLE OF XXXXXXXXXXX & XXXXXXXX
LLP. Each AMCC Shareholder acknowledges that he has been advised and has been
given an opportunity to hire counsel with respect to this Agreement and the
transactions contemplated hereby. Each Shareholder further acknowledges that the
law firm of Xxxxxxxxxxx & Xxxxxxxx LLP has solely represented EMCC in connection
with this Agreement and the transactions contemplated hereby and no other
person.
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6.13. TIME IS OF THE ESSENCE. It is understood and agreed among the
parties hereto that time is of the essence in this Agreement and this applies to
all terms and conditions contained herein.
6.14. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Settlement and Stock
Purchase Agreement to be duly executed by their duly authorized officers as of
the day and year first above written.
EUROPEAN MICRO HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------------------
Title: Co-Chairman
-------------------------------------
AMERICAN MICRO COMPUTER CENTER, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
-------------------------------------
Title: President
-------------------------------------
/s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxx
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