EXHIBIT 99.1
JOINT COMPROMISE AND SETTLEMENT AGREEMENT
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This is a Joint Agreement of Settlement and Compromise ["Agreement"], made
and entered into, as of the date written below, by and between ERLY Industries,
Inc. ["ERLY"] and Watch-Edge International, Inc., formerly known as Chemonics
Industries, Inc. ["Watch-Edge"], the "ERLY Group"] and Kingwood Lakes South,
L.P. ["KLS"]; Xxxxxxx X. Xxxxx ["Xxxxx"]; Xxxxxx Company, Inc. ["Xxxxxx Co."]
(Xxxxx and Xxxxxx Co. being collectively the "Xxxxxx Plaintiffs"); and Xxxxxxx
X. Xxxxxx ["Xxxxxx"]; [hereinafter all referred to collectively as the "Xxxxxx
Group"]. The purpose of this Agreement is to set forth and embody a negotiated
compromise and settlement, and to provide for releases, as set forth herein.
PARTIES
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ERLY filed for relief under chapter 11 of the Bankruptcy Code on September
28, 1998, (the "ERLY Petition Date") and is continuing in possession of its
properties and is operating its business, as debtor in possession, pursuant to
sections 1107 and 1108 of the Bankruptcy Code. The ERLY chapter 11 case is
pending in the United States Bankruptcy Court for the Southern District of
Texas, Corpus Christi Division in Case No. 98-21515-C-11.
Watch-Edge filed for relief under chapter 11 of the Bankruptcy Code on
November 30, 1998, (the "Watch-Edge Petition Date") and is continuing in
possession of its properties and is operating its business, as debtor in
possession, pursuant to sections 1107 and 1108 of the Bankruptcy Code. The
Watch-Edge chapter 11 case is pending in the United States Bankruptcy Court for
the Southern District of Texas, Corpus Christi Division in Case No. 98-21895-C-
11.
The Xxxxxx Group consists of Kingwood Lakes South, L.P.; Xxxxxxx X. Xxxxx;
Xxxxxx Company, Inc.; and Xxxxxxx X. Xxxxxx. The Xxxxxx Plaintiffs consist of
Xxxxxx Co. and Xxxxxxx X. Xxxxx.
BACKGROUND
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The Xxxxxx Group obtained a Texas State Court judgment against ERLY and
others. A judgment was originally signed on January 13, 1998; a corrected
judgment was signed on January 16, 1998; and the "Second Corrected Final
Judgment" (the "Judgment") was entered on March 30, 1998 and became final on or
about June 12, 1998. Subsequent thereto, the ERLY Group and others, entered
into a settlement agreement with the Xxxxxx Group as of August 20, 1998 [the
"August Settlement"], to which reference is hereby made for all purposes.
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 1 of 14.
Pursuant to the August Settlement, Watch-Edge became obligated to Xxxxxx
Co. and Xxxxx pursuant to a note in the principal amount of $3,800,000 (the
"Watch-Edge Note") which is payable by its terms no later than February 13,
1999. By its terms, the Watch-Edge Note is payable prior to that date in the
event that the assets or stock of Chemonics International, Inc.["Chemonics"],
the wholly owned subsidiary of Watch-Edge, is sold or refinanced. Chemonics is
presently the subject of a present sale order in the Watch-Edge chapter 11. All
parties hereto anticipate that the assets or stock of Chemonics will shortly be
sold.
In order to secure payment of the Judgment and any other obligation of ERLY
to the Xxxxxx Plaintiffs, ERLY granted the Xxxxxx Plaintiffs a security interest
in and pledge in and to 100% of the issued and outstanding stock of Watch-Edge,
which security interest and pledge are junior to a prior pledge and security
interest in favor of NationsBank, N.A.
The Xxxxxx Plaintiffs also assigned to Watch-Edge their rights under the
Judgment against American Rice, Inc. ("ARI") only. Those assigned rights have
become a claim in the ARI Chapter 11 case then and now pending in the United
States Bankruptcy Court for the Southern District of Texas, Corpus Christi
Division, in Case No. 98-21254-C-11; the August Settlement further provided that
the Xxxxxx Plaintiffs would forbear from enforcing the Judgment against the
"Settling Defendants" (as defined in the August Settlement) provided, however,
that this forbearance obligation would terminate against some or all of the
Settling Defendants under certain specified circumstances and in certain
specified ways.
ERLY and Watch-Edge each believe that each of them has causes of action to
set aside the August Settlement and the granting of the pledge and security
interest in and to the Watch-Edge stock. The Xxxxxx Group denies all of these
claims and assertions. The parties have negotiated this agreement in order to
avoid litigation among them over the August Settlement and to fully and finally
resolve (i) any and all claims or challenges which Watch-Edge and/or ERLY may
assert with respect to the August Settlement or against the Xxxxxx Group,
including, without limitation, any challenge to the August Settlement as a
preference, fraudulent conveyance, or under any other avoiding powers contained
in the Bankruptcy Code, and any claim or challenge under applicable non-
bankruptcy law; and (ii) conditioned upon the timely payment to the Xxxxxx
Plaintiffs of all amounts payable at the Closing, all claims of the Xxxxxx Group
under the August Settlement.
In order to make their respective peace, and provided that the Xxxxxx Group is
paid at the Closing, each member of the Xxxxxx Group and the ERLY Group does
hereby enter into this Agreement to completely release and settle their claims
at the Closing.
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 2 of 14.
CONSIDERATION
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NOW THEREFORE, IN CONSIDERATION OF THE SUM OF TEN ($10.00) AND NO/100
DOLLARS, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT, SUFFICIENCY AND
FAIRNESS OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS FOLLOWS:
SETTLEMENT TERMS
================
Obligations of Watch-Edge
-------------------------
At the Closing, Watch-Edge agrees to do the following:
1. Completely release the Xxxxxx Group and each member thereof and the
directors of Xxxxxx Co., consisting, in addition to Xxxxxx of Xxxx Xxxxxx and
Xxxxxxx Xxx ("Xxxxxx Directors") from any and all liability, including but not
limited to any and all liability relating to the August Settlement and the
Watch-Edge Note, save and except those arising under the Agreement.
2. Execute and deliver to Xxxxxx Group and each member thereof and the Xxxxxx
Directors the Release Agreement in the form of Exhibit A attached hereto and
herein incorporated by reference.
3. Pay to the Xxxxxx Plaintiffs the sum of $2,500,000.00 in good funds.
Obligations of ERLY:
--------------------
At the Closing, ERLY agrees to do the following
1. Completely release the Xxxxxx Group and each member thereof and Xxxxxx
Directors from any and all liability, including but not limited to any and all
liability relating to the August Settlement and the Watch-Edge Note, save and
except those arising under the Agreement.
2. Execute and deliver to Xxxxxx Group and each member and the Xxxxxx
Directors the Release Agreement in the form of Exhibit A attached hereto and
herein incorporated by reference.
3. The claim of the Xxxxxx Group presently filed in the ERLY chapter 11 case
shall be reduced and allowed in full as a general unsecured claim in the amount
of $5 million and not subject to any challenge of any type, as set forth in the
next sentences. The Order
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 3 of 14.
of the Bankruptcy Court in the ERLY chapter 11 case authorizing ERLY to enter
into this Agreement shall specifically provide that the Xxxxxx Plaintiffs shall
have an allowed general unsecured claim in the ELRY chapter 11 case (which shall
share ratably with other general unsecured claims) in the amount of $5 million
(the "Xxxxxx Claim"), which shall not be subject to challenge of any type,
whether as to amount, validity, priority, allowance, or otherwise and whether
based on any principal of law, equity or otherwise, by any party in interest in
the ERLY or Watch-Edge chapter 11 cases, including, without any limitation,
trustee that may be appointed in either of their chapter 11 cases or in any
subsequent chapter 7 case for either of them.
4. Notwithstanding the foregoing, ERLY shall have the option, but not the
obligation to redeem the Xxxxxx Claim in the manner and amounts and on or before
the dates specified below:
Early Redemption: ERLY shall have the right, but not the obligation, to
redeem the Xxxxxx Claim by paying to Xxxxxx, in good and valid funds, an amount
equal to SIX HUNDRED FIFTY THOUSAND AND NO/100 ($650,000) on or before June 26,
1999, after obtaining an order of the Bankruptcy Court on notice to all of
ERLY's creditors authorizing such payment. Upon ERLY's timely payment of such
funds, the Xxxxxx Claim shall be deemed to be fully satisfied and Xxxxxx
thereafter shall receive no further distribution from ERLY on account of the
Xxxxxx Claim. In no event and under no circumstances may this option be
exercised after June 26, 1999.
Later Redemption: If the Early Redemption option specified above is not
exercised by ERLY, ERLY shall have the right, but not the obligation, to redeem
the Xxxxxx Claim according to the following schedule after obtaining an order of
the Bankruptcy Court on notice to all of ERLY's creditors authorizing such
payments:
Face Amount of Xxxxxx Claim
Subject to Redemption Payment to Xxxxxx Due
$1.0 million $ 150,000
$2.0 million $ 300,000
$3.0 million $ 500,000
$4.0 million $ 750,000
$5.0 million $1,050,000
Payments to Xxxxxx under this provision in good and valid funds must be
made on or before October 26, 1999. Upon ERLY's timely payment of the specified
payment amount, the redeemed portion of the Xxxxxx Claim shall be deemed to be
fully satisfied and Xxxxxx thereafter shall receive no further distribution from
ERLY on account of that portion of the Xxxxxx Claim. Any portion of the Xxxxxx
Claim not subject to redemption hereunder shall continue to share ratably with
other general unsecured claims as an
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 4 of 14.
allowed claim against ERLY's estate. In no event and under no circumstances may
this option be exercised after October 26, 1999.
OBLIGATIONS OF THE XXXXXX GROUP:
--------------------------------
At the Closing, the Xxxxxx Group, and each member thereof will do the
following:
1. Effective only upon the Xxxxxx Plaintiffs' receipt of all cash to be paid
to the Xxxxxx Plaintiffs at the Closing, each member of the Xxxxxx Group will
release all claims against ERLY and Watch-Edge other than those arising out of
this Agreement and shall each sign and deliver to ERLY and to Watch-Edge the
Release Agreement in the form of Exhibit B attached hereto and herein
incorporated by reference. The Release Agreement shall apply to the following
current or former directors and officers of ERLY or Watch-Edge only: Xxxxxxx
Xxxxxx; Xxxxx Xxxxxxx; Xxxxx Xxxxx; Xxxxxx Califero; Xxxxxx X. Xxxxx, Xx.;
Xxxxxxxx X. Xxxxx; Xxxxxx Xxxx and Xxxx Xxxx, who shall be required to execute a
release in favor of the Xxxxxx Group in the form of the Release Agreement in
order to be released under the Release Agreement.
THE CLOSING
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The Closing shall occur on or before the earlier of the closing of the sale
of Chemonics and February 26, 1999. As used herein, the phrase "sale of
Chemonics" means a sale of the stock or assets of Chemonics. The Closing shall
take place on or before the close of business on the date of the Closing at the
offices of the Xxxxxx Group's attorney, XxXxxxxxxx & Xxxxxxxx L.L.P., 4100
NationsBank Center, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000. If the closing
of the sale of Chemonics occurs on or before February 26, 1999, the Closing
shall occur concurrently with such closing, and the $2.5 million to be paid to
the Xxxxxx Plaintiffs at the Closing shall be paid directly out of the proceeds
of the sale of Chemonics, through any escrow established in connection with the
closing of such sale. If the sale of Chemonics does not close on or before
February 26, 1999, Watch-Edge shall pay the $2.5 million to the Xxxxxx
Plaintiffs out of the proceeds of a loan which FIA Investment Company L.L.P.
("FIA") has agreed to make to Watch-Edge for the express purpose of funding that
payment if the sale of Chemonics does not close on or before February 26, 1999.
If the sale of Chemonics does not close on or before February 26, 1999, and
Watch-Edge and ERLY do not otherwise pay the Xxxxxx Plaintiffs $2.5 million on
or before that date, then this Agreement shall terminate automatically and be of
no further force or effect, and the parties shall be restored to their position
immediately prior to the execution of this Agreement, without prejudice to any
rights, claims, obligations or defenses which they may have had at that time.
Provided, however, that notwithstanding such termination, the Xxxxxx Plaintiffs
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shall retain any and all claims that they may have, and any and all rights that
they may
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 5 of 14.
have to bring actions, against FIA, as beneficiaries of FIA's agreement to fund
the $2.5 million payment; and the assertion of any such claims and the
prosecution of any such action shall in no way be deemed an election of remedies
or otherwise prejudice Xxxxxx'x rights and claims against Watch-Edge (including,
without limitation, under the Watch-Edge Note), ERLY (including, without
limitation, under the Xxxxxx Plaintiffs Judgment and claim against ERLY), or
otherwise.
CONDITIONS PRECEDENT
--------------------
This Agreement is subject to the following conditions:
1. The entry of orders by the Bankruptcy Court approving this Agreement in
both the ERLY and Watch-Edge chapter 11 cases, which orders (1) either
become final and non-appealable; or (2) are not stayed on appeal. Each
party to this Agreement will use their best efforts in obtaining such
approval. If for whatever reason, the Bankruptcy Court does not approve
this Settlement Agreement, the parties will return to their position as
existed prior to the execution of this Settlement Agreement, without waiver
or prejudices to any claim, rights, obligations or defenses.
2. This Agreement must be approved by the Boards of ERLY and Watch-Edge and
written evidence of such approval signed by each of their directors must be
provided to the Xxxxxx Group, on or before the Closing.
3. Orders approving the Agreements must be entered before the Closing occurs.
WARRANTIES AND REPRESENTATIONS BY THE XXXXXX GROUP AND EACH MEMBER
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1. The Xxxxxx Group, and each member thereof, expressly warrant and represent
to ERLY and to Watch-Edge, that as of the signing of this Agreement and that as
of the Closing none of them have assigned, pledged, or otherwise, in any manner
whatsoever, sold or transferred, either by instrument in writing or otherwise
transferred, any rights, demands, causes of action and/or claims which are the
subject matter of this Agreement, or which may be owed by either of them, or any
of them aside from the interests assigned to counsel for the Xxxxxx Plaintiffs.
(The Xxxxxx Plaintiffs shall deliver to ERLY Group proof that the Xxxxxx
Plaintiffs have been authorized by Dow, Xxxxxxx & Xxxxxxxx, P.C. and XxXxxxxxxx
& Xxxxxxxx, L.L.P., to enter into this Settlement Agreement.)
2. The Xxxxxx Group, and each member thereof, expressly warrant and
represent to ERLY and to Watch-Edge that they have approved of all of the terms,
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 6 of 14.
conditions and covenants of this Agreement as evidenced by their duly authorized
signatures to this Agreement.
WARRANTIES AND REPRESENTATIONS BY ERLY AND WATCH-EDGE
-----------------------------------------------------
1. ERLY and Watch-Edge, expressly warrant and represent to the Xxxxxx Group,
that as of the signing of this Agreement and that as of the Closing, none of
them have assigned, pledged, or otherwise, in any manner whatsoever, sold or
transferred, either by instrument in writing or otherwise, any rights, demands,
causes of action and/or claims which are the subject matter of this Agreement,
or which may be owed by either of them, or any of them.
2. ERLY and Watch-Edge expressly each warrant and represent to the Xxxxxx
Group and each member thereof that as of the signing of this Agreement and as of
the Closing that the Boards of ERLY and Watch-Edge have authorized this
Agreement.
WARRANTIES AND REPRESENTATIONS BY ALL PARTIES
---------------------------------------------
1. Each party, and each person who signs this Agreement, further expressly
warrants and represents that they are competent and authorized to sign this
Agreement; that before signing this Agreement they have read, have been fully
informed about, and understand all of the terms, contents, conditions and
effects of this Agreement; that no promise, representation, inducement or
agreement, other than expressly stated in this Agreement, has been made by any
person; that this Agreement contains the entire agreement between the parties;
and that each party has relied solely and completely on their own judgment and
the advice of their attorneys.
2. Each party represents that the individual signing this Agreement on behalf
of such party has authority to bind the party for whom he or she acts.
MISCELLANEOUS PROVISIONS
------------------------
Gender. The use of the masculine gender shall be interpreted to include any
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feminine gender references which may be applicable to any one who is included in
the definition of each party as set forth above.
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 7 of 14.
Notices. All notices, requests, demands, and other communications under
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this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally or by facsimile transmission on the
Party to whom directed; or on the third day after mailing if mailed to the Party
to whom directed, by first class mail, postage prepaid, registered or certified
and properly addressed to such Party as follows:
If to ERLY Xx. Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxxxx
Chairman, ERLY Industries, Inc. Attorney at Law
X.X. Xxx 000 Attorney for ERLY Industries, Inc.
Xxxxx Xxxxx, XX 00000 711 N. Carancahua,
Fax 000-000-0000 Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000
Fax 000-000-0000
Xxxxxxx Xxxxxxxxxxx/Xxxxxx Xxxxxxx
Xxxxxx & Xxxx
Attorneys for ERLY Creditors
Committee
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax 000-000-0000
R. Xxxxx Xxxxx
Xxxxxxx & Xxxxxx
Attorneys for Watch-Edge
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax 000-000-0000
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 8 of 14.
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If to Watch Xx. Xxxxxxx X. Xxxxxx, R. Xxxxx Xxxxx
Edge: Chairman, Watch-Edge Xxxxxxx & Xxxxxx
International, Inc. Attorneys for Watch-Edge
X.X. Xxx 000 000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Fax 000-000-0000 Fax 000-000-0000
Xxxxxxx X. Xxxxxxxxxx
Attorney for ERLY Industries, Inc.
000 X. Xxxxxxxxxx,
Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000
Fax 000-000-0000
Xxxxxxx Xxxxxxxxxxx/Xxxxxx Xxxxxxx
Xxxxxx & Xxxx
Attorneys for ERLY Creditors
Committee
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax 000-000-0000
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If to Xxxxxx Kingwood Lakes South, L.P., Xxxxx X. Xxxxxxxx, Esq.
Group or any Xxxxxx Company, Inc. and XxXxxxxxxx & Xxxxxxxx, LLP
member Xxxxxxx X. Xxxxxx 4100 NationsBank Center
thereof: 00000 Xxxx Xxxxxxx Xxxx., 000 Xxxxxxxxx Xxxxxx
Xxxxx 0000 Xxxxxxx, XX 00000
Xxx Xxxxxxx, XX 00000 Fax 000-000-0000
Fax 000-000-0000
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxxx/Xxxxx Xxxxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx & Xxxxx
Xxxxx 0000 0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Fax 000-000-0000 Fax 000-000-0000
Controlling Law. The parties agree that where applicable Title 11 of the
----------------
United States Code and Texas law will control any dispute arising from the
interpretation or
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 9 of 14.
implementation of the Agreement. Further, the parties agree to submit to the
jurisdiction and venue of the United States Bankruptcy Court for the Southern
District of Texas, Corpus Christi Division, concerning any such dispute that may
arise from this Agreement.
Payments to Xxxxxx Plaintiffs. All payments of cash to the Xxxxxx
------------------------------
Plaintiffs under this Agreement (or any document delivered hereunder or in
connection herewith) shall be made by wire transfer directed to the following
account: Frost Bank, 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, ABA
#000000000, XxXxxxxxxx & Xxxxxxxx, L.L.P. IOLTA Account, Account #50 0000000,
with notice of the wire transfer to Xxxxx X. Xxxxxxxx, XxXxxxxxxx & Xxxxxxxx,
L.L.P., 4100 NationsBank Center, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000,
telephone: (000) 000-0000, fax: (000) 000-0000.
Representatives. "Representatives" of a person or entity shall mean and
----------------
include all of that person's or entity's past or present principals, agents,
servants, employees, attorneys, consultants, experts, partners (both general
and/or limited), equity participants, officers, directors, shareholders, parent
companies, subsidiaries, affiliates, predecessors, successors, assigns, estates,
beneficiaries, heirs, devisees, legatees, trustees, and personal
representatives.
Successors and Assigns. This Agreement shall enure to the benefit of and be
-----------------------
binding upon each respective party's heirs, if any, and successors and assigns.
Without in any manner limiting the scope of the foregoing, this Agreement shall
be binding on any trustee(s) appointed in the chapter 11 case of ERLY or Watch-
Edge and on any trustee(s) appointed upon a conversion of the chapter 11 case of
ERLY and or Watch-Edge to a case under chapter 7 of the Bankruptcy Code.
Counterparts. This Agreement may be executed in multiple counterparts, each
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of which when taken together with the other executed counterparts shall be
deemed to constitute an original.
No admission of liability. Neither this Agreement, nor any of the terms
-------------------------
hereof, nor any negotiations or proceedings in connection herewith, shall
constitute or be construed as or be deemed to be evidence of an admission on the
part of any party of any liability or wrongdoing whatsoever, or the truth or
untruth, or merit or lack of merit, of any claim or defense of any Party.
Further, this Agreement is in the nature of Compromise and Settlement pursuant
to Rule 408, Federal Rules of Evidence and any comparable State Rule.
Accordingly, neither this Agreement nor any of the terms hereof, nor any
negotiations or proceedings in connection herewith, nor any performance or
forbearance hereunder hall be offered or received in evidence or used in any
proceeding against any party, or used in any proceeding, or otherwise, for any
purpose whatsoever except with respect to the effectuation and enforcement of
this Agreement and obtaining the approval thereof by the Bankruptcy Court.
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 10 of 14.
Additional Documents. The parties hereto agree to execute such additional
---------------------
documents as may be reasonably required by respective counsel to give full
effect to the purposes and intent of this Agreement.
Invalidity. If any one or more of the provisions of this Settlement
----------
Agreement, or the application of any such provision to any person, entity, or
set of circumstances, shall be determined to be invalid, unlawful, or
unenforceable to any extent at any time, the remainder of this Settlement
Agreement, and the application of such provision to persons, entities, or
circumstances other than those as to which it is determined to be invalid,
unlawful, or unenforceable, shall not be affected, and shall continue to be
enforceable to the fullest extent permitted by law. Any invalid, unlawful, or
unenforceable provision hereof shall be reformed to the extent necessary to
render it valid, lawful, and enforceable in a manner consistent with the
intentions of the parties hereto regarding such provision. In no event shall
this provision be construed to permit this Agreement to be interpreted, applied
or enforced in such a manner as would permit any party to receive the
consideration which such party is to receive under this Agreement without
providing all of the consideration which it is to provide under this Agreement
to the party or parties to which it is required to provide such consideration.
Entire Agreement of the Parties. This Agreement constitutes the entire
--------------------------------
agreement and understanding of all parties hereto and/or representatives, with
respect to the transactions contemplated hereby, and supersedes all prior
agreements, arrangements, and understandings related to the subject matter
hereof. No representations, warranties, recitals, covenants, or statements of
intention have been made by, or on behalf of, any party hereto which is not
embodied in this Agreement or in connection with the transactions contemplated
hereby, and no party hereto shall be bound by, or liable for, any alleged
representation, warranty, recital, covenant, or statement of intention not so
set forth. All the terms, provisions, conditions, covenants, warranties,
recitals, and statements of intention in this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by each party hereto or each of
their respective representatives.
Waiver. No supplement, modification, or amendment of this Agreement shall
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be binding unless executed in writing by all parties affected thereby. No waiver
of any of the provisions of this Agreement shall be deemed or constituted a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
Limitation on Third-Party Beneficiaries. Nothing contained in this
----------------------------------------
Agreement is intended to confer any rights or remedies under or by reason of
this Agreement on any person or entity other than the parties hereto, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third-party to any party to this
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 11 of 14.
Agreement, nor shall any provision give any third-party any right of subrogation
or action over or against any party to this Agreement.
All Provisions Contractual. All provisions of this Agreement and are
---------------------------
contractual in nature, and not mere recitals only.
Attorney's fees. Each party agrees to be solely responsible for the
----------------
payment of their respective attorney's fees, court costs, expert witness fees,
court reporter's fees, and all other expenses incurred on said party's behalf as
a result of or in connection with this Agreement.
Time of the Essence. The parties hereto expressly acknowledge and agree
--------------------
that time is of the essence and that all deadlines and time periods provided for
under this Agreement are ABSOLUTE AND FINAL.
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 12 of 14.
FULL UNDERSTANDING AND AGREEMENT. EACH PERSON, ENTITY, OR PARTY WARRANTS THAT
---------------------------------
SUCH PARTY HAS READ THIS FULL AND FINAL AGREEMENT (INCLUDING EXHIBITS) AND FULLY
UNDERSTANDS IT. EACH PARTY WARRANTS THAT SUCH PARTY IS OF LEGAL COMPETENCE OR
LEGAL CAPACITY, AND IS FREE, WITHOUT DURESS, TO EXECUTE THIS SETTLEMENT
AGREEMENT AND DELIVER THE RELEASES REQURED HEREBY, AND THAT SUCH PARTY HAS DONE
SO OR WILL DO SO OF FREE WILL AND ACCORD, WITHOUT RELIANCE ON ANY REPRESENTATION
OF ANY KIND OR CHARACTER NOT EXPRESSLY SET FORTH HEREIN.
Dated as of March 26, 1999.
WATCH-EDGE INTERNATIONAL, INC. ERLY INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXX
----------------------------- ------------------------------
Xxxxxxx X. Xxxxxx, Chairman & Xxxxxxx X. Xxxxxx, Chairman &
Duly Authorized Duly Authorized
KINGWOOD LAKES SOUTH, X. X. XXXXXX COMPANY, INC.
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXX
----------------------------- ------------------------------
Xxxxxxx X. Xxxxxx, President Xxxxxxx X. Xxxxxx, President &
of Xxxxxx Company, Inc. as Duly Authorized
General Partner of Kingwood
Lake South, L.P. and duly
Authorized
XXXXXXX X. XXXXXX XXXXXXX X. XXXXX
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
----------------------------- -----------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxx
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 13 of 14.
APPROVED AS TO FORM:
Law Offices of Xxxxxxx X. Xxxxxxxxxx Xxxxxxx & Xxxxxx
By: /s/ XXXXXXX X. XXXXXXXXXX By: /s/ R. XXXX XXXXX
---------------------------------- ------------------------------
Xxxxxxx X. Xxxxxxxxxx R. Xxxx Xxxxx
Attorney for ERLY Industries, Inc. Attorneys for Watch-Edge
000 X. Xxxxxxxxxx, Xxxxx 000 International, Inc.
Xxxxxx Xxxxxxx, XX 00000 000 Xxxx Xxxxxxxx, Xxxxx 000
000-000-0000 Phone Xxx Xxxxxxx, XX 00000
000-000-0000 Fax 000-000-0000
000-000-0000 Fax
Xxxxxxx, Xxxxxxxx & Xxxxx XxXxxxxxxx & Xxxxxxxx, LLP
Professional Corporation
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXXXX
--------------------------------- ------------------------------
Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxxxx, Esq.
Attorneys for the Xxxxxx Group 4100 NationsBank Center
0000 Xxxxxxxx Xxxx, Xxxxx 000 000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
000-000-0000 Phone 000-000-0000 Phone
000-000-0000 Fax 000-000-0000 Fax
Attorneys for the Xxxxxx Group
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COMPROMISE AND SETTLEMENT AGREEMENT, PAGE 14 of 14.
RELEASE
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(OF ERLY GROUP)
1. As used in this Release, the following terms have the following
meanings:
a. "ERLY" means ERLY Industries, Inc., the debtor in chapter 11 case
number 98-21515 pending in the United States Bankruptcy court, Southern
District of Texas, Corpus Christi Division.
b. "ERLY Group" means ERLY and Watch-Edge. The term "ERLY Group
Member" refers individually to such entities.
c. "ERLY Group Released Parties" means and includes (i) the ERLY
Group, each ERLY Group Member, and the successors, predecessors and assigns
of each ERLY Group member, and any and all of them; (ii) the Participating
ERLY/Watch-Edge Directors; and (iii) in the case of any individuals falling
within the scope of (i) or (ii), their respective heirs. In no event shall
the ERLY Group Released Parties include Xxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxx, or any present or former officer, director, or employee of ERLY or
Watch-Edge who is not specifically named as a Participating ERLY/Watch-Edge
Director.
d. "Participating ERLY/Watch-Edge Directors" means only those of the
following current directors of ERLY or Watch-Edge who execute this Release
in their personal capacities: Xxxxxxx Xxxxxx; Xxxxx Xxxxxxx; Xxxxx Xxxxx;
Xxxxxx Califero; Xxxxxx X. Xxxxx, Xx.; and Xxxxxxxx X. Xxxxx, and also
includes those of the following former directors of ERLY or Watch-Edge who
execute this Release in their personal capacities: Xxxxxx Xxxx and Xxxx
Xxxx. "Participating ERLY/Watch-Edge Director"
1
refers individually to such persons. The failure of any of the named
individuals to execute this Release shall in no way affect the
effectiveness of this Release as to the ERLY Group or any Participating
ERLY/Watch-Edge Director.
e. "Settlement Agreement" means the "Joint Compromise and Settlement
Agreement" by and among the ERLY Group and the Xxxxxx Group.
f. "Xxxxxx Group" means the Xxxxxx Plaintiffs, Xxxxxxx X. Xxxxxx, and
Kingwood Lakes South, L.P. The term "Xxxxxx Group Member" refers
individually to such entities.
g. "Xxxxxx Plaintiffs" means Xxxxxx Co. and Xxxxxxx X. Xxxxx.
h. "Xxxxxx Settlement" means that certain "Agreement" by and among
the Xxxxxx Group, the ERLY Group, Early California Food Acquisition
Corporation, Xxxxxx X. Xxxxxx, and Xxxxxxx X. Xxxxxx, dated as of August
20, 1998.
i. "Watch-Edge" means Watch-Edge International, Inc. f/k/a Chemonics
Industries, Inc., the debtor in chapter 11 case number 98-21895, pending in
the United States Bankruptcy Court, Southern District of Texas, Corpus
Chirsti Division.
j. "Watch-Edge Note" means that certain Promissory Note in the
principal amount of $3,800,000.00 dated August 20, 1998, executed by Watch-
Edge in favor of the Xxxxxx Plaintiffs.
2. For good and valuable consideration, including the benefits of the
Settlement Agreement, and in order to settle all claims asserted or that could
have been asserted by or on behalf of the Xxxxxx Group or any Xxxxxx Group
Member arising from or relating to the Xxxxxx Settlement or the Watch-Edge Note,
the Xxxxxx Group, and each Xxxxxx Group Member, hereby forever releases and
discharges the ERLY Group Released Parties from, and waives and
2
relinquishes, any and all claims, demands, debts, liabilities, obligations,
actions, causes of action, suits, sums of money, accounts, reckonings,
covenants, contracts, controversies, agreements, promises, and rights
whatsoever, whenever arising, known or unknown, suspected or unsuspected,
contingent or fixed, liquidated or unliquidated, matured or unmatured, in law,
equity, bankruptcy, or otherwise, which the Xxxxxx Group, any Xxxxxx Group
Member, or any person or entity claiming from, through, or under any of them,
ever had, now has, or hereafter can, shall, or may have against any of the ERLY
Group Released Parties by reason of, arising from, relating to, or in connection
with the Xxxxxx Settlement, the Watch-Edge Note, or any other document executed
pursuant to the Xxxxxx Settlement; provided, however, that nothing contained in
this Release shall release any claims against, or obligations of, any ERLY Group
Released Party under the Settlement Agreement.
3. Each party hereto expressly understands that section 1542 of the Civil
Code of the State of California 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.
4. Each party to this Release hereby agrees that the provisions of section
1542 of the Civil Code of the State of California and all similar federal or
state laws, rights, rules, or legal principles, legal or equitable, which may be
applicable hereto, to the extent that they may apply to any of the matters
released herein, are hereby knowingly and voluntarily waived and relinquished by
each party to this Release, in each and every capacity, to the full extent that
such rights and benefits pertaining to the matters released herein may be
waived, and each party to this
3
Release hereby agrees and acknowledges that this waiver and relinquishment is an
essential term of this Release, without which the consideration provided to it
would not have been given.
5. In connection with such waiver and relinquishment each party to this
Release acknowledges that it is aware that it may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which it now knows or believes to be true, with respect to the matters
released herein. Nevertheless, it is the intent of each party in executing this
Release fully, finally, and forever to settle and release all such matters, and
all claims relative thereto, which exist, may exist or might have existed
(whether or not previously or currently asserted in any action) which are the
subject of the releases granted under paragraph 2.
6. This Release is being delivered in accordance with and in consideration
of the agreements set forth in the Settlement Agreement and the occurrence of
the Closing (as defined therein).
7. This Release may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
8. This Release shall be governed in all respects, including validity,
interpretation, and effect, by, and construed and enforced under the law of the
State of California, without giving effect to the principles of conflict of laws
thereof.
9. This Release shall inure to the benefit of and be binding upon each
respective party's heirs, if any, and successors and assigns, including, without
limitation, any trustee(s) appointed in the chapter 11 case of ERLY or Watch-
Edge and/or any trustee(s) appointed upon a conversion of the chapter 11 case of
ERLY and/or Watch-Edge to a case under chapter 7 of the Bankruptcy Code.
4
IN WITNESS WHEREOF, each of the parties hereto has caused this Release to
be executed by a duly-authorized officer or representative on
__________________, 1999.
DATED: , 1999 XXXXXX COMPANY, INC.
------------------
By
----------------------------------
Xxxxxxx X. Xxxxxx, President
Notary
---------------------------
DATED: , 1999
------------------ ------------------------------------
XXXXXXX X. XXXXX
Notary
---------------------------
DATED: , 0000 XXXXXXXX XXXXX XXXXX, L.P.
------------------
By
----------------------------------
Xxxxxxx X. Xxxxxx, President of Xxxxxx
Company, Inc., as General Partner of
Kingwood Lakes South, L.P.
Notary
---------------------------
5
DATED: , 1999
------------------ -------------------------------------------------
XXXXXXX X. XXXXXX
Notary
---------------------------
DATED: , 1999
------------------ -------------------------------------------------
XXXXXXX XXXXXX
Notary
---------------------------
DATED: , 1999
------------------ -------------------------------------------------
XXXXX XXXXXXX
Notary
---------------------------
DATED: , 1999
------------------ -------------------------------------------------
XXXXX XXXXX
Notary
---------------------------
6
DATED: , 1999
------------------ -------------------------------------------------
XXXXXX CALIFERO
Notary
---------------------------
DATED: , 1999
------------------ -------------------------------------------------
XXXXXX X. XXXXX, XX.
Notary
---------------------------
DATED: , 1999
------------------ -------------------------------------------------
XXXXXXXX X. XXXXX
Notary
---------------------------
DATED: , 1999
------------------ -------------------------------------------------
XXXXXX XXXX
Notary
---------------------------
7
DATED: , 1999
------------------ -------------------------------------------------
XXXX XXXX
Notary
---------------------------
8
RELEASE
-------
(OF XXXXXX GROUP)
1. As used in this Release, the following terms have the following
meanings:
a. "ERLY" means ERLY Industries, Inc., the debtor in chapter 11 case
number 98-21515 pending in the United States Bankruptcy Court, Southern
District of Texas, Corpus Christi Division.
b. "ERLY Group" means ERLY and Watch-Edge. The term "ERLY Group
Member" refers individually to such entities.
c. "Settlement Agreement" means the "Joint Compromise and Settlement
Agreement" by and among the ERLY Group and Xxxxxx Group.
d. "Xxxxxx Directors" means the directors of Xxxxxx Co., consisting,
in addition to Xxxxxxx X. Xxxxxx, of Xxxx Xxxxxx and Xxxxxxx Xxx. "Xxxxxx
Director" refers individually to such persons.
e. "Xxxxxx Group" means the Xxxxxx Plaintiffs, Xxxxxxx X. Xxxxxx, and
Kingwood Lakes South, L.P. The term "Xxxxxx Group Member" refers
individually to such entities.
f. "Xxxxxx Group Released Parties" means and includes (i) the Xxxxxx
Group, each Xxxxxx Group Member, and the successors, predecessors, assigns
and transferees of each Xxxxxx Group member, and any and all of them; (ii)
the Xxxxxx Directors; and (iii) in the case of any individuals falling
within the scope of (i) or (ii), their respective heirs.
g. "Xxxxxx Plaintiffs" means Xxxxxx Co. and Xxxxxxx X. Xxxxx.
1
h. "Xxxxxx Settlement" means that certain "Agreement" by and among
the Xxxxxx Group, the ERLY Group, Early California Food Acquisition
Corporation, Xxxxxx X. Xxxxxx, and Xxxxxxx X. Xxxxxx, dated as of August
20, 1998.
i. "Watch-Edge" means Watch-Edge International, Inc. f/k/a Chemonics
Industries, Inc., the debtor in chapter 11 case number 98-21895, pending in
the United States Bankruptcy Court, Southern District of Texas, Corpus
Chirsti Division.
j. "Watch-Edge Note" means that certain Promissory Note in the
principal amount of $3,800,000.00 dated August 20, 1998, executed by Watch-
Edge in favor of the Xxxxxx Plaintiffs.
2. For good and valuable consideration, including the benefits of the
Settlement Agreement, and in order to settle all claims asserted or that could
have been asserted by or on behalf of the ERLY Group or any ERLY Group Member
arising from or relating to the Xxxxxx Settlement, the Watch-Edge Note, or any
claim to set aside or avoid any transfer or obligation to any Xxxxxx Group
Member, whether based on any provision of the Bankruptcy Code or applicable
nonbankruptcy law, the ERLY Group, and each ERLY Group Member, hereby forever
releases and discharges the Xxxxxx Group Released Parties from, and waives and
relinquishes, any and all claims, demands, debts, liabilities, obligations,
actions, causes of action, suits, sums of money, accounts, reckonings,
covenants, contracts, controversies, agreements, promises, and rights
whatsoever, whenever arising, known or unknown, suspected or unsuspected,
contingent or fixed, liquidated or unliquidated, matured or unmatured, in law,
equity, bankruptcy, or otherwise, which the ERLY Group, any ERLY Group Member,
or any person or entity claiming from, through, or under any of them (including,
without limitation, any chapter 7 or chapter 11 trustee), ever had, now has, or
hereafter can, shall, or may have against any of the Xxxxxx Group
2
Released parties by reason of, arising from, relating to, or in connection with
the Xxxxxx Settlement, the Watch-Edge Note, or any other document executed
pursuant to the Xxxxxx Settlement, or based on or arising under 11 U.S.C. (S)(S)
510, 544-553, inclusive, or any similar provisions of nonbankruptcy law, whether
under a theory of preference, fraudulent conveyance, or otherwise; provided,
however, that nothing contained in this Release shall release any claims
against, or obligations of, any Xxxxxx Group Released Party under the Settlement
Agreement.
3. Each party hereto expressly understands that section 1542 of the Civil
Code of the State of California 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.
4. Each party to this Release hereby agrees that the provisions of section
1542 of the Civil Code of the State of California and all similar federal or
state laws, rights, rules, or legal principles, legal or equitable, which may be
applicable hereto, to the extent that they may apply to any of the matters
released herein, are hereby knowingly and voluntarily waived and relinquished by
each party to this Release, in each and every capacity, to the full extent that
such rights and benefits pertaining to the matters released herein may be
waived, and each party to this Release hereby agrees and acknowledges that this
waiver and relinquishment is an essential term of this Release, without which
the consideration provided to it would not have been given.
5. In connection with such waiver and relinquishment each party to this
Release acknowledges that it is aware that it may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which it now knows or believes to be
3
true, with respect to the matters released herein. Nevertheless, it is the
intent of each party in executing this Release fully, finally, and forever to
settle and release all such matters, and all claims relative thereto, which
exist, may exist or might have existed (whether or not previously or currently
asserted in any action) which are the subject of the releases granted under
paragraph 2.
6. This Release is being delivered in accordance with and in consideration
of the agreements set forth in the Settlement Agreement and the occurrence of
the Closing (as defined therein).
7. This Release may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
8. This Release shall be governed in all respects, including validity,
interpretation, and effect, by, and construed and enforced under the law of the
State of California, without giving effect to the principles of conflict of laws
thereof.
9. This Release shall inure to the benefit of and be binding upon each
respective party's heirs, if any, and successors and assigns. Without in any
manner limiting the scope of the foregoing, this Release shall be binding on any
trustee(s) appointed in the chapter 11 case of ERLY or Watch-Edge and on any
trustee(s) appointed upon a conversion of the chapter 11 case of ERLY and/or
Watch-Edge to a case under chapter 7 of the Bankruptcy Code.
4
IN WITNESS WHEREOF, each of the parties hereto has caused this Release to
be executed by a duly-authorized officer or representative on
__________________, 1999.
DATED: , 1999 ERLY INDUSTRIES, INC.
----------------
By
-----------------------------------------------
Its
-----------------------------------------------
Notary
------------------------------------
DATED: , 1999 WATCH-EDGE INTERNATIONAL, f/k/a CHEMONICS
---------------- INDUSTRIES, INC.
By
-----------------------------------------------
Its
-----------------------------------------------
Notary
------------------------------------
5
