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EXHIBIT 10.1
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (the "Settlement
Agreement") is made as of September 26, 1997 (the "Effective Date") by and
among Xxxxxx Industries, Inc. ("Xxxxxx"), Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx
Xxxxxxxxx ("Xxxxxxxxx") and all of the debentureholders listed in paragraph 1
below (each being referred to individually as "Investor" and all being referred
to collectively as "Investors").
In consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Xxxxxx, Butler, Armstrong, and the
Investors agree as follows:
1. Unless otherwise noted, as used herein,
"Claims" means all actions, causes of action, suits, debts,
dues, sums of money, accounts, controversies, agreements, promises, variances,
trespasses, damages, judgments, abstracts of judgments, liens, executions,
claims, and demands, losses and liabilities, of every kind and nature, in law
or equity, and in whatever form denominated, including without limitation
claims, counterclaims, cross-claims and/or third party claims, related to or
arising from the Debentures, the offering or subscription of the Debentures, or
the subject matter of the Lawsuit that Xxxxxx or the Investors asserted or
could have asserted in the Lawsuit from the beginning of time to the Effective
Date of this settlement.
"Debentures" means Xxxxxx Industries, Inc. 8% Convertible
Debentures Due April 26, 1999, including without limitation the governing
subscription agreement and all documents or agreements necessary or related
thereto.
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"Investor" or "Investors" means, individually or collectively,
AG Superfund International Partners, L.P., The Xxxxxxx Fund, Xxxxxxx Capital
Ltd., Darissco Diversified Investments, Inc., GAM Arbitrage, Inc., KA
Investments, LDC, Lake Management LDC, Leonardo, L.P., Raphael, L.P., Richcourt
$ Strategies, Inc., The Tail Wind Fund, Windward Island Limited, and Wood Gundy
London, Ltd.
"Lawsuit" means all allegations and/or matters related to or
contained in Civil Action No. 96-CV-9357T, Cameron Capital Ltd. x. Xxxxxx
Industries, Inc., in the United States District Court for the Western District
of New York, and in Civil Action No. 96-CV-6534T, Lake Management LDC and KA
Investments LDC x. Xxxxxx Industries, Inc., in the United States District Court
for the Western District of New York.
"Outstanding Unredeemed Balance" means, with respect to each
of the following Investors, the following dollar amounts:
INVESTOR OUTSTANDING UNREDEEMED BALANCE
-------- ------------------------------
AG Superfund International Partners, L.P. $ 150,000.00
The Xxxxxxx Fund $ 750,000.00
Cameron Capital Ltd. $ 800,000.00
Darissco Diversified Investments, Inc. $ 180,000.00
GAM Arbitrage, Inc. $ 250,000.00
KA Investments, LDC $ 150,000.00
Lake Management LDC $ 850,000.00
Xxxxxxxx, L.P. $ 1,250,000.00
Raphael, L.P. $ 300,000.00
Richcourt $ Strategies, Inc. $ 200,000.00
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The Tail Wind Fund $ 600,000.00
Windward Island Limited $ 150,000.00
Wood Gundy London, Ltd. $ 750,000.00
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$ 6,380,000.00
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For the sake of convenience, the number of shares to be issued
pursuant to paragraph 4 hereof are as follows:
INVESTOR NUMBER OF SHARES
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AG Superfund International Partners, L.P. 250,000
The Xxxxxxx Fund 1,250,000
Cameron Capital Ltd. 1,333,333
Darissco Diversified Investments, Inc. 300,000
GAM Arbitrage, Inc. 416,667
KA Investments, LDC 250,000
Lake Management LDC 1,416,667
Xxxxxxxx, L.P. 2,083,333
Raphael, L.P. 500,000
Richcourt $ Strategies, Inc. 333,333
The Tail Wind Fund 1,000,000
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Windward Island Limited 250,000
Wood Gundy London, Ltd. 1,250,000
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10,633,333
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"Xxxxxx" means Xxxx X. Xxxxxx or any entity he directly or
indirectly owns or controls, including without limitation Xxxxxx Investments
L.L.C. and/or Xxxxxx Investments, Inc., as well as any of their officers,
directors, employees, partners, shareholders, representatives, subsidiaries or
affiliates.
2. Within two (2) business days after delivery to each Investor
of the common stock certificates as required by paragraph 4 hereof and the
5-year non-callable warrants required by paragraph 6 hereof, counsel to each of
the parties shall execute a Stipulation of Dismissal With Prejudice and Without
Costs in the form attached as Exhibit "A" (the "Stipulation of Dismissal"),
which will dismiss with prejudice all Claims of the parties to this Settlement
Agreement against each other; provided, however, that neither Xxxxxx nor the
Investors are releasing or are dismissing any of their Claims against Xxxxxx,
and Xxxxxx and the Investors expressly reserve and retain all such Claims. The
fully-executed Stipulation of Dismissal shall be delivered to the law firm of
Nixon, Hargrave, Devans & Xxxxx, attention: Xxxxxxx X. Xxxxxxxx, Esq., which
will, within two (2) business days after receiving the same, cause it to be
filed with the Court with an accompanying request that the Stipulation of
Dismissal be "So Ordered" by the Court.
3. Each of Xxxxxx, Xxxxxx and Xxxxxxxxx, on the one hand, and the
Investors, on the other hand, together with each of their respective
predecessors, successors, heirs, executors, administrators, assigns, parent
companies, subsidiaries and affiliates, their past and present directors,
officers, employees, agents, servants, attorneys, shareholders
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and/or partners hereby remise, release, acquit and forever discharge each
other, and each other's respective predecessors, successors, heirs, executors,
administrators, assigns, parent companies, subsidiaries and affiliates, their
past and present directors, officers, employees, agents, attorneys (including
without limitation each of the attorneys and law firms that appeared in the
Lawsuit on behalf of any party to this Settlement Agreement), servants,
shareholders, and/or partners from any and all Claims; provided, however, that
each and all of the parties to this Settlement Agreement specifically preserve,
and this release shall not apply to, any and all Claims that each or all of the
parties hereto ever had, now have or hereafter can, shall or may have against
Xxxxxx; and provided further that the foregoing release shall not affect,
waive, limit, modify or otherwise change in any manner the obligations or
liabilities of any party under this Settlement Agreement or any instrument or
agreement executed and delivered pursuant to this Settlement Agreement, which
shall remain in full force and effect.
4. Xxxxxx agrees to convert, or cause to be converted, each
Investor's Outstanding Unredeemed Balance and issue shares of Xxxxxx common
stock to each said Investor at a conversion price of $0.60/share, subject to
adjustments for stock splits, reverse splits and the like, with no restrictions
placed upon the sale of such common stock. Within three (3) business days of
the Effective Date, Xxxxxx shall cause to be delivered to the Investors
certificates representing such freely tradable shares, without restrictions and
bearing no legend. Xxxxxx warrants that such shares will be unrestricted,
freely tradable and will not bear any legend. Xxxxxx further warrants that it
will never interfere with or do anything intentionally to prevent, impede or
delay any Investor's freely trading any shares issued pursuant to this
Settlement Agreement, and Xxxxxx acknowledges that this is a material
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representation on which each Investor will rely in executing this Settlement
Agreement and without which no Investor would execute this Settlement
Agreement. If, following the Effective Date, an Investor requests that the
certificates representing such shares be reregistered in street or nominee
name, and if Xxxxxx'x transfer agent fails to comply with such request within
thirty days following such request, any release executed by such Investor shall
be null and void, and such Investor shall no longer be bound by this Settlement
Agreement, and as to such Investor this Settlement Agreement shall become null
and void and shall have no further force and effect and neither this Settlement
Agreement, any of its provisions, nor any of the negotiations and proceedings
relating thereto: (a) shall be offered, received in evidence or otherwise used
in the Lawsuit or in any other action or proceeding for any purpose, or (b)
shall prejudice the rights of any of the parties hereto, who shall be restored
to their respective positions immediately prior to the execution of this
Settlement Agreement. Further, Xxxxxx agrees that in the event subsequent
transfers of such shares are prohibited or enjoined by order of any court or
other governmental body, it shall, at its expense, upon the written request of
Investors holding 10% or more of the Outstanding Unredeemed Balance, promptly
file and cause to become effective a registration statement covering the resale
of the shares of Xxxxxx common stock issued to the Investors and the shares
underlying the warrants held by the Investors, as described in paragraph 6
hereof. In such event, Xxxxxx shall notify the other Investors and offer them
the opportunity to participate in such registration. The other Investors shall
have ten (10) days from the date of Xxxxxx'x notice to notify Xxxxxx in writing
of their desire to participate. Xxxxxx shall be required to file only one
registration statement pursuant to this paragraph (provided that it becomes
effective).
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5. In conjunction with the issuance of the shares of Xxxxxx
common stock to the Investors, each Investor agrees to execute an irrevocable
proxy, on behalf of itself and its principals and affiliates, granting the
President of Xxxxxx, ex-officio, the right to vote the shares of common stock
issued to Investors pursuant to paragraphs 4 and 6 for the election of the
persons nominated as Directors by the Board of Directors of Xxxxxx at each
annual or special meeting of stockholders of Xxxxxx; provided, however, that
Investors will not transfer or exchange their shares with anyone solely for the
purpose of terminating any such proxy, and it is understood, without
limitation, that a cash sale of shares to unaffiliated third-parties with no
restrictions or contractual buy-back rights is presumed not to be a transfer or
exchange solely for the purpose of terminating such proxy; and provided further
that this proxy shall expire on the earlier of the tenth anniversary of the
effective date of this Settlement Agreement or the transfer or exchange of such
shares in compliance with the preceding proviso.
6. Within three (3) business days of the Effective Date, Xxxxxx
will deliver to each Investor 5-year non-callable warrants sufficient to
purchase a number of additional shares of Xxxxxx common stock having an
aggregate purchase price equal to 15% of each Investor's Outstanding Unredeemed
Balance at a price of $1.00/share, such shares to be unrestricted, freely
tradable, unlegended and subject to the same provisions and protections
described in paragraph 4 and with the same attendant registration rights
described in paragraph 4 hereof. In the event that prior to the date upon
which any or all of the warrants are exercised, Xxxxxx shall (a) declare a
dividend or make a distribution on the outstanding shares of its common stock
in shares of common stock, (b) subdivide or reclassify the outstanding shares
of its common stock into a greater number of shares, or (c) combine
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or reclassify the outstanding shares of its common stock into a smaller number
of shares, then the terms of all outstanding warrants shall be adjusted
accordingly. In the event that prior to the expiration of the warrants Xxxxxx
merges with or into, or all of the outstanding common stock of Xxxxxx is
acquired by, another person or entity, the terms of the warrants shall provide
that the holders of the warrants shall have the right thereafter upon payment
of the exercise price to purchase upon exercise of a warrant the kind and
amount of securities or cash receivable upon such consolidation or merger had
the warrant been exercised immediately prior to such action.
7. The Investors agree (a) to assign to Xxxxxx, to the maximum
extent permitted by the law of whichever state Xxxxxx selects to govern said
assignments, any and all Claims they each may have against Xxxxxx, and (b) to
execute any and all documents Xxxxxx may reasonably deem necessary to assign
and prosecute at Xxxxxx'x expense such Claims; provided, however, that, in
addition to paying expenses (including legal expenses) in connection with such
cooperation and assistance, Xxxxxx agrees to take steps to minimize any
inconvenience or burden upon the Investors and agrees to maintain as
confidential such assignments except as may be required by law or necessary for
the prosecution or settlement of such Claims.
8. In the event that any Person (a "Third Party"), including
without limitation Xxxxxx, asserts a claim against any or all of the Investors
which seeks to require that such Investor(s) pay to such Third Party (by way of
contribution, indemnification or otherwise, directly or indirectly) (a) an
amount in respect of the sums paid by such Third Party to Xxxxxx or an amount
sought from such Third Party by Xxxxxx, and (b) which in any way relates to the
subject matter of the Lawsuit or this Settlement Agreement ("Third Party
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Claim"), then Xxxxxx shall take whatever actions are necessary to cause the
dismissal with prejudice of any/all such Third Party Claim(s), including, but
not limited to, the dismissal of Xxxxxx'x claims against the Third Party to the
extent contribution is sought against any or all of the Investors, within ten
(10) days of notice to Xxxxxx of such Third Party Claim(s). In addition, in
the event any such Third Party Claim(s) is/are asserted, Xxxxxx hereby agrees
to indemnify and hold harmless each and all of the Investors for all such
amounts sought thereby, plus attorneys' fees, costs and expenses incurred by
each and all of the Investors in connection with such Third Party Claim(s), up
to the amount which Xxxxxx has collected or seeks to collect from such Third
Party(ies). In addition to the foregoing, it is agreed that the provisions of
New York General Obligations Law Section 15-108 shall be applicable in their
entirety to the settlement provided herein.
9. Xxxxxx warrants that it is solvent, that the transactions
contemplated by this Settlement Agreement will not directly or indirectly
result in its insolvency, and that it has no present plans or intention to file
for or otherwise seek relief or protection under the bankruptcy laws of the
United States. Xxxxxx further warrants that, for a period ending 366 days
after the Effective Date, if Xxxxxx files a voluntary petition in bankruptcy,
or otherwise has an order for relief entered under 11 U.S.C. Section 101 et
seq., Xxxxxx shall, at the sole discretion and written request of the
Investors, convert back to Debentures all or some of the shares issued
hereunder (according to the Investors' Outstanding Unredeemed Balances as
defined herein) and, to the extent Xxxxxx may lawfully do so, restore the
parties to the status quo ante in every respect.
10. Xxxxxx, Butler, Armstrong, and the Investors each represent
that prior to the execution of this Settlement Agreement they have fully
informed themselves of its
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terms, contents, conditions and effects and that no promise or representation
of any kind has been made to them except as expressly stated in this Settlement
Agreement. Xxxxxx, Butler, Armstrong, and the Investors each represent that
they have relied solely and completely upon their own judgment and the advice
of their counsel in signing this Settlement Agreement and that this document
represents and expresses the entire agreement by and among the Investors and
Xxxxxx, Xxxxxx and Xxxxxxxxx concerning the subjects it purports to cover.
11. Xxxxxx, Xxxxxx and Xxxxxxxxx represent and warrant to the
Investors, and the Investors represent and warrant to Xxxxxx, Xxxxxx and
Xxxxxxxxx that they have not sold, assigned, transferred, conveyed or otherwise
disposed of any claim, demand, right or cause of action, relating to any matter
which is covered by this Settlement Agreement, that each is the sole owner of
such claim, demand, right or cause of action, and each has the power and
authority and has been duly authorized to enter into and perform this
Settlement Agreement, and that this agreement is the binding obligation of
each, enforceable in accordance with its terms.
12. Neither the execution of this Settlement Agreement nor
anything herein contained is intended to be, nor shall be construed to be, an
admission by Xxxxxx, Xxxxxx and Xxxxxxxxx or the Investors of any liability to
the other, now, in the past or in the future, or an admission of the existence
of facts upon which liability could be based. This Settlement Agreement is
contractual and it has been entered into to compromise disputed claims and to
avoid the uncertainty and expense of further litigation. This Settlement
Agreement and each of its provisions and any orders of the Court relating to it
shall not be offered or received in evidence in this Lawsuit or in any other
action or proceeding or otherwise used as an
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admission or concession as to the merits of the Lawsuit or the liability of any
nature on the part of any of the parties hereto except to enforce its terms.
13. It is expressly understood and agreed that except for the
persons and entities listed in paragraph 3 hereof as being released, there are
no intended third party beneficiaries of this Settlement Agreement and that no
persons other than the parties hereto shall have the rights and privileges to
enforce the provisions of this Settlement Agreement.
14. This Settlement Agreement may be amended, modified, waived or
discharged only by mutual written agreement of the affected parties hereto.
Any such amendment, modification, waiver or discharge shall not be deemed a
waiver of any other provision of this Settlement Agreement unless so specified.
15. Notwithstanding the place where this Settlement Agreement may
be executed by any of the parties, or any other factor, all terms and
provisions hereof shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be fully
performed in that State and without regard to the principles of conflicts of
laws thereof and any action brought to enforce, or otherwise arising out of
this Settlement Agreement, shall be brought only in either a federal or state
court sitting in the state of New York.
16. The failure of a party to insist upon strict adherence to any
of the terms of this Settlement Agreement on any occasion shall not be
considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Settlement
Agreement.
17. This Settlement Agreement and the Stipulation of Dismissal
together constitute the entire agreement among the parties hereto with respect
to the subject matter
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hereof, and supersede all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting such subject matter.
18. This Settlement Agreement may be executed in multiple
originals or counterparts, each of which shall be deemed an original for all
purposes, but all such counterparts together shall constitute one and the same
instrument. Facsimile copies of this Settlement Agreement shall be considered
originals for all purposes.
19. Xxxxxx, Butler, Armstrong, and the Investors hereby agree, on
their behalf and on behalf of their agents, employees, and legal and other
representatives that they each will keep confidential the terms of this
settlement hereunder and the other terms of this Settlement Agreement, and that
they will not disclose said terms to anyone other than their counsel of record.
Notwithstanding the foregoing, nothing contained herein shall prevent the
parties from responding to any inquiry about this settlement or its underlying
facts and circumstances by the Securities and Exchange Commission, any
self-regulatory organization or disclosing this Settlement Agreement or its
terms if ordered to do so by a court of competent jurisdiction or if otherwise
required to do so by law.
20. The parties hereto agree to execute, have acknowledged and
deliver to each other such other documents and instruments, if any, as may be
necessary or appropriate to evidence or carry out the terms of this Settlement
Agreement.
21. This Settlement Agreement shall be deemed to have been
mutually prepared by the parties hereto and shall not be construed against any
of them solely by reason of authorship.
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22. This Settlement Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs, legal
representatives and successors; provided, however, that no assignment by any
party hereto shall operate to relieve such party of its obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this
Settlement Agreement as of the date herein written above.
Dated: September 26, 1997
_________________________________________
XXXXXX INDUSTRIES, INC.
By:______________________________________
_________________________________________
XXXXXX X. XXXXXX
_________________________________________
XXXXX XXXXXXXXX
_________________________________________
CAMERON CAPITAL LTD.
_________________________________________
AG SUPERFUND INTERNATIONAL PARTNERS, L.P.
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By:______________________________________
_________________________________________
GAM ARBITRAGE, INC.
By:______________________________________
_________________________________________
XXXXXXXX, L.P.
By:______________________________________
_________________________________________
RAPHAEL, L.P.
By:______________________________________
_________________________________________
THE XXXXXXX FUND
By:______________________________________
_________________________________________
DARISSCO DIVERSIFIED INVESTMENTS, INC.
By:______________________________________
_________________________________________
KA INVESTMENTS, LDC
By:______________________________________
_________________________________________
LAKE MANAGEMENT LDC
By:______________________________________
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_______________________________________________
RICHCOURT $ STRATEGIES, INC.
By:____________________________________________
_______________________________________________
THE TAIL WIND FUND
By:____________________________________________
_______________________________________________
WINDWARD ISLAND LIMITED
By:____________________________________________
_______________________________________________
WOOD GUNDY LONDON, LTD.
By:____________________________________________
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