Exhibit 10.48
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT, dated April 8, 1998, is made by and among
Xxxxxxxx Industries, Inc., a Virginia corporation, Xxxxxxxx Adhesives, Inc., a
Virginia corporation (collectively, the "Corporations"), Xxxxxxxx Family Limited
Partnership, a Virginia limited partnership (the "Partnership"), H. Xxxxxx
Xxxxxxxx, Xx. ("Xxxxxxxx") and Xxxxxx X. Xxxxxxxx, Xx. ("Guarantor").
Recitals
WHEREAS, Xxxxxxxx has acknowledged that he is indebted to the
Corporations in the amount of THREE HUNDRED EIGHTY-FIVE THOUSAND and No/100
DOLLARS ($385,000.00) by reason of his use of the accounts set forth on Exhibit
1 attached hereto and incorporated herein; and
WHEREAS, the parties hereto desire to settle the claims, disputes and
differences among them with respect to matters related to Xxxxxxxx'x known debts
to the Corporations; and
WHEREAS, in connection with such settlement Xxxxxxxx desires to repay
the Corporations for their losses and to be released from certain claims, and
the Corporations desire to accept such payment by and on behalf of Xxxxxxxx in
satisfaction of the known claims against Xxxxxxxx on the terms and conditions
more particularly set forth herein.
Agreement
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, the parties agree as follows:
1. Definitions.
1.1. Claims. The term "Claims" shall refer to those claims
of the Corporations against Xxxxxxxx which are set out on Exhibit 1, and no
others.
1.2 Debt. The term "Debt" shall refer to those obligations
of Xxxxxxxx to the Corporations arising out of the Claims set forth on Exhibit
1.
1.3 Note. The term "Note" shall refer to the Promissory
Note the form of which is attached hereto as Exhibit 2.
1.4 Settlement Documents. The term "Settlement Documents"
shall refer to the Note, the Pledge and Security Agreement by and between
Xxxxxxxx Adhesives, Inc. and the Partnership, the Unconditional Guaranty given
by Xxxxxx X. Xxxxxxxx, Xx., and the other documents set forth on Exhibit 6,
attached hereto.
2. Satisfaction of the Debt.
2.1. Settlement Amount. The parties acknowledge and agree
that the amount negotiated by the parties for repayment by Xxxxxxxx of the Debt
(including interest on the principal thereof at the Corporations' applicable
borrowing rate), and related accounting and legal
fees, totals $385,000.00.
2.2 Cash Payment. Concurrently herewith, Xxxxxxxx has
delivered to the Corporation a cashier's or official bank check in the amount of
$10,000.00, payable to the order of Xxxxxxxx Adhesives, Inc.
2.3 Promissory Note. Concurrently with the execution of
this Agreement, the Partnership shall execute the Note in the principal amount
of $375,000.00 on the terms and conditions set forth in the form attached hereto
and incorporated herein as Exhibit 2.
2.4 Entry of Confessed Judgment Against Xxxxxxxx. On or
before April 13, 1998, Xxxxxxxx agrees to personally appear before the Clerk of
the Circuit Court of the County of Sussex, Virginia, and confess judgment in
favor of the Corporations in the amount of $375,000.00, and to take all other
action necessary pursuant to ss. 8.01-432 et seq. of the Code of Virginia to
permit such confessed judgment to be entered and docketed against him in the
Circuit Court of the County of Sussex, Virginia. Such judgment shall provide
that it arises out of claims against Xxxxxxxx for his actions which fall within
the dischargeability exceptions of 11 U.S.C. ss.523(a)(4), a fact which Xxxxxxxx
acknowledges, and that it is intended by the judgment debtor and the judgment
creditors to be nondischargeable under 11 U.S.C. ss.523(a)(4) (the "Confessed
Judgment"). The Corporations hereby covenant and agree that so long as the Note
and all other obligations of the Partnership under any of the Settlement
Documents are not in default or have not been cured as provided in the Note or,
as applicable, in the other Settlement Documents, then the Corporations shall
neither docket in any jurisdiction other than Sussex County, Virginia, nor seek
enforcement of the Confessed Judgment in any jurisdiction, including without
limitation any city, county, or any political subdivision of any state in the
United States, or in any foreign country. The Corporations further agree that
should the Corporations, or either of them, breach this provision, Xxxxxxxx
shall be entitled to injunctive relief against any such breach in the Circuit
Court of the City of Richmond, Virginia, which the parties hereby agree is
proper venue; and Xxxxxxxx and the Corporations hereby agree that the prevailing
party in such injunction proceeding shall be entitled to recover his or its
attorneys fees reasonably incurred in the prosecution or defense of such
proceeding from the losing party. Upon payment in full of the Note and
satisfaction of all obligations under the other Settlement Documents, the
Corporations shall cause the Confessed Judgment to be marked "satisfied" and
shall take no further actions to enforce the Confessed Judgment.
3. Additional Covenants of the Parties.
3.1 Security Interest. The parties further agree that the
Debt shall be secured by the pledge of 2,325,000 shares of common stock of
Xxxxxxxx Industries, Inc. (the "Securities") which Securities are currently
owned by the Partnership. To evidence such security interest, concurrently with
the execution of this Agreement, Xxxxxxxx Adhesives, Inc. and the Partnership
shall enter into a Pledge and Security Agreement on the terms and conditions set
forth in the form attached hereto and incorporated herein as Exhibit 3. The
Partnership hereby represents and warrants that it owns the Securities free and
clear of all liens and encumbrances.
3.2 Perfection of Security Interest. Currently with the
execution of this Agreement, the Partnership shall deliver to the Corporations
certificate numbers 3673 and 3674 which evidence the Securities, as well as such
stock powers as the Corporations deem necessary to perfect the Corporations'
security interest.
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3.3 Several Nature of Confessed Judgment and Note. The
parties acknowledge and agree that the Partnership's obligations under the Note
and the obligations which could become enforceable under the Confessed Judgment
are several obligations of the Partnership and Xxxxxxxx, but that in the event
of default under the Note, the Corporations shall be entitled to recover only a
maximum of $375,000.00 plus all accrued interest, late payments or other amounts
provided for under the terms of the Note and the other Settlement Documents, and
that any amounts collected or received by the Corporations from the Partnership
under the Note or from Xxxxxxxx under the Confessed Judgment shall operate as a
credit toward the total amounts due under the Note and the Settlement Documents
or the Confessed Judgment.
3.4 Redemption of Xxxxxxxx'x Interest in Partnership. The
parties acknowledge that as part of the consideration by and between Xxxxxxxx
and the Partnership related to this Settlement Agreement, the Note and the
remaining Settlement Documents, Xxxxxxxx shall, pursuant to the terms of a
Partnership Redemption Agreement duly executed by Xxxxxxxx and the Partnership
on even date with the execution of this Settlement Agreement, redeem annually on
a prorata basis so much of his ownership interest in the Partnership as equates
to the Partnership's payments of interest and principal under the Note.
Additionally, Xxxxxxxx shall upon execution of this Settlement Agreement, have
resigned his positions as an officer and director of the general partner of the
Partnership and he shall have relinquished all of his stock ownership of the
same general partner. Further, Xxxxxxxx shall, upon execution of this Settlement
Agreement have conveyed to a trustee his entire interest in the Partnership
pursuant to an Irrevocable Assignment.
3.5 Noncompetition. Xxxxxxxx agrees that, for a period of
three (3) years from and after the date of this Agreement, he will not directly
or indirectly, either on behalf of himself or on behalf of any person or entity
(except the Corporations) with which he may be associated as an agent, employee,
consultant or otherwise, engage in or have any financial interest in a business
which is a competitor of the Corporations within the geographical area of the
United States, lying east of the Mississippi River. The parties acknowledge that
the scope of this noncompetition provision is reasonable in terms of length and
geographic scope because the customers of the Corporations are located
throughout this area. Xxxxxxxx hereby acknowledges that any breach or threatened
breach of this Section may result in significant and continuing injury to the
Corporations, the monetary value of which may be difficult to establish.
Therefore, Xxxxxxxx agrees that the Corporations shall be entitled to injunctive
relief by a court of appropriate jurisdiction in the event of any breach or
threatened breach of this Section.
3.6 Confidential Information. Xxxxxxxx agrees that he will
not disclose any Confidential Information regarding the Corporations.
"Confidential Information" shall include (i) any written or recorded information
belonging to the Corporations which is clearly identified or marked as being
confidential and (ii) information concerning the Corporations' business and/or
marketing plans, procedures, strategies or objectives; financial conditions,
costs, pricing, proprietary technology or other intellectual property; product
orders, sales, product development activities, existing and prospective
customers and any and all methods of operation. Xxxxxxxx shall maintain the
Corporations' Confidential Information confidential except: (a) Confidential
Information which is or becomes known publicly through no fault of the party
receiving or learning of the Confidential Information; (b) Confidential
Information learned by a party from a third party entitled to disclose it; (c)
Confidential Information already known to Xxxxxxxx before receipt from the
Corporations but only as shown by Xxxxxxxx'x prior written records; (d)
Confidential Information disclosed with the prior written consent of the
Corporations; or (e) Confidential Information disclosed pursuant to any judicial
or governmental request, requirement or order, provided Xxxxxxxx takes
reasonable steps to give the Corporations sufficient prior notice
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in order to contest such request, requirement or order. Xxxxxxxx hereby
acknowledges that any breach or threatened breach of this Section may result in
significant and continuing injury to the Corporations, the monetary value of
which may be difficult to establish. Therefore, Xxxxxxxx agrees that the
Corporations shall be entitled to injunctive relief by a court of appropriate
jurisdiction in the event of any breach or threatened breach of this Section.
3.7 Indemnification. Except as provided in paragraph 2.4
herein, the parties agree that the Corporations shall not be required to
indemnify and hold harmless Xxxxxxxx for any legal expenses or other indemnity
related to the Claims, whether incurred before or after the execution of this
Agreement, and Xxxxxxxx hereby expressly waives and releases any claim thereto.
The parties further agree that neither this Settlement Agreement nor any
previous indemnification by the Corporations of any party to this Settlement
Agreement shall (a) obligate the Corporations to provide indemnification or (b)
otherwise affect any right or obligation of the Corporation to provide or deny
indemnification, with respect to matters unrelated to the Claims(as defined
below).
3.8 Financial Statements. Xxxxxxxx, the Partnership, and
the Guarantor shall deliver to the Corporations current financial statements,
certified by them to be true and correct, in such form as may be reasonably
requested by the Corporations, upon the execution of this Agreement or within a
reasonable time thereafter and upon each anniversary date of this Agreement
until all obligations evidenced by the Note have been satisfied in full.
3.9 Insolvency Certificates. Concurrently herewith, the
Partnership shall execute and deliver an Insolvency Certificate, in the form
attached hereto and incorporated herein as Exhibit 4.
3.10 Legal Opinion of the Partnership's and the Guarantor's
Counsel. Concurrently herewith, counsel for the Partnership and the Guarantor
shall furnish the Corporations with its legal opinion, in the form attached
hereto and incorporated herein collectively as Exhibit 5.
4. Guaranty. The obligations of the Corporations hereunder are
expressly conditioned on the execution of an unconditional guaranty by Xxxxxx X.
Xxxxxxxx, Xx. in the form attached hereto as Exhibit 3. Xxxxxx X. Xxxxxxxx, Xx.
joins in the execution of this Settlement Agreement in order to evidence his
obligations hereunder, including but not limited to his agreement to execute the
unconditional guaranty in the form attached hereto and incorporated herein as
Exhibit 3 concurrently with the execution of this Settlement Agreement.
5. Release of Xxxxxxxx and the Partnership by the Corporations. The
Corporations, for themselves, and their employees, agents and assigns, do hereby
forever release and discharge Xxxxxxxx and the Partnership and their respective
successors, assigns, individual partners, servants, agents, and employees, as
applicable, from all claims arising out of the matters specifically identified
in Exhibit 1 attached hereto (the "Claims"), and from all claims for legal and
auditing expenses incurred by the Corporations in their investigation and
settlement of the Claims. This release shall not extend to claims arising from
any matter other than those specifically identified in Exhibit 1 attached
hereto.
6. Other Documents. Concurrently herewith, the Partnership shall
cause to be delivered to the Corporation, the certificates and other documents
included on the Closing Memorandum attached hereto and incorporated herein as
Exhibit 6.
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7. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their heirs,
personal representatives or successors and assigns.
9. Effective Time. This Agreement shall become effective upon the
execution and delivery of all the Settlement Documents, the delivery of the cash
payment required under paragraph 2.2 above, and the entry and docketing of the
Confessed Judgment in the Circuit Court of Sussex County, Virginia.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXX INDUSTRIES, INC.
By /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Chairman & CEO
------------------------------
XXXXXXXX ADHESIVES, INC.
By /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Chairman & CEO
------------------------------
XXXXXXXX FAMILY LIMITED PARTNERSHIP
By: Xxxxxxxx Family Corporation, Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxxx X. Xxxxxxxx, Xx., President
/s/ H. Xxxxxx Xxxxxxxx, Xx.
----------------------------------
H. XXXXXX XXXXXXXX, XX.
/s/ Xxxxxx X. Xxxxxxxx, Xx.
----------------------------------
XXXXXX X. XXXXXXXX, XX.
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EXHIBIT 1
Credit card purchases from August 1, 1992 to January 31, 1998 on American
Express master account number:
0000-000000-00000
0000-000000-00000
0000-000000-00000
0000-000000-00000
Credit card purchases from January 1, 1997 to January 31, 1998 on the Key Bank
MasterCard master account number 0000-0000-0000-0000.
Checks and drafts payable to Xxxxxxxx and styled payees including H. Xxxxxx
Xxxxxxxx, Xx., X.X. Xxxxxxxx, Xx. and Xxxxxx Xxxxxxxx, from August 1, 1992 to
January 31, 1998, for the following accounts:
Xxxxx River Bank (formerly known as
Bank of Waverly), Waverly, Virginia 0000403078
Xxxxx River Bank (formerly known as
Bank of Waverly), Waverly, Virginia 0001105947
Horizon Bank, Malvern, Arkansas 0007014643
Horizon Bank, Malvern, Arkansas 0007014627
Xxxxx Xxxxxx, Richmond, Virginia 000-00000-00
Claims arising from any matter other than those specifically identified above
are excluded.
EXHIBIT 2
[EXECUTION ORIGINAL]
PROMISSORY NOTE
$375,000.00 Richmond, Virginia
April 8, 1998
For Value Received, the undersigned Xxxxxxxx Family Limited
Partnership, a Virginia limited partnership (the "Maker") unconditionally
promises to pay to the order of Xxxxxxxx Adhesives, Inc. (including any
subsequent holder hereof, the "Holder"), without offset or deduction, at 000
Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, except as provided herein or at such
other place as the Holder may designate, the principal sum of Three Hundred
Seventy-Five Thousand and No/100 Dollars ($375,000.00), together with interest
on the unpaid principal balance hereof from the date hereof until this Note is
paid in full. The unpaid principal balance hereof shall bear interest at a rate
of nine percent (9%) per annum.
Principal and interest hereunder shall be due and payable as follows:
(a) Interest shall be payable monthly, in advance, beginning on
April 8, 1998 and consecutively on the same calendar day of
each such month thereafter; and
(b) Principal shall be payable in a single payment on April 8,
2001.
provided that, if not sooner paid, all unpaid principal and accrued but unpaid
interest hereunder shall be due and payable on the third (3rd) anniversary of
the date of this Note. Interest shall be computed on the basis of a 365-day year
and shall be paid for the actual number of days elapsed.
All payments made on account of the indebtedness evidenced by this Note
shall be made without offset or deduction in lawful money of the United States
of America in immediately available funds and shall be applied first to the
payment of interest accrued on the unpaid principal balance from time to time
remaining unpaid, and the remainder of such payments shall be applied on account
of principal.
In the event any payment of principal or interest due under this Note
is made more than fifteen (15) days after the date when the same is due, then
the Lender shall be entitled to collect a "late charge" in an amount equal to
five percent (5%) of such payment.
The Maker may prepay this Note in whole or in part at any time and from
time to time, without penalty. Any partial prepayments shall be expressly
identified as a prepayment and shall be in an amount of not less than Two
Thousand Five Hundred and No/100 Dollars ($2,500.00).
The Maker hereby expressly agrees that, upon default in the payment of
principal at maturity or after acceleration as herein provided, the outstanding
principal balance shall continue to bear interest at the rate of nine percent
(9%) per annum.
IMPORTANT NOTICE: THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION
WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND
ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.
Until this Note has been satisfied in full, the Maker shall provide to
the Holder annual financial statements on or before each anniversary of this
Note in such a form as the Holder may reasonably prescribe, which financial
statements shall be certified to be true and correct by the general partner of
said partnership.
This Note has been made and is delivered pursuant to a certain
Settlement Agreement (the "Settlement Agreement") dated April 8, 1998 by and
among Xxxxxxxx Industries, Inc., Xxxxxxxx Adhesives, Inc., Xxxxxxxx Family
Limited Partnership, H. Xxxxxx Xxxxxxxx, Xx. and Xxxxxx X. Xxxxxxxx, Xx.
regarding (a) the settlement of certain claims by Xxxxxxxx Industries, Inc. and
Xxxxxxxx Adhesives, Inc. against H. Xxxxxx Xxxxxxxx, Xx. with respect to certain
actions of H. Xxxxxx Xxxxxxxx, Xx. while serving as an officer, director and
employee of Xxxxxxxx Industries, Inc. and Xxxxxxxx Adhesives, Inc., respectively
and (b) the redemption by the Maker of H. Xxxxxx Xxxxxxxx, Xx.'s partnership
interest in the Maker. Accordingly, the Maker hereof represents that the
obligation represented by this Note is for business purposes.
This Note is secured as provided in a certain Pledge and Security
Agreement (the "Pledge and Security Agreement"), dated April 8, 1998 by and
between Xxxxxxxx Adhesives, Inc. and the Xxxxxxxx Family Limited Partnership and
as further provided in a certain Unconditional Guaranty (the "Unconditional
Guaranty"), dated April 8, 1998 executed by Xxxxxx X. Xxxxxxxx, Xx.
("Guarantor") in favor of the Holder.
The entire principal amount hereof, together with all accrued interest,
shall immediately become due and payable (without demand for payment, notice of
nonpayment (except as provided below), presentment, notice of dishonor, protest,
notice of protest, or any other notice or demand, all of which the Maker hereby
waives) at the option of the Holder upon the occurrence of a Default hereunder
(failure to exercise this option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent Default). A "Default" hereunder
shall be deemed to have occurred if any one or more of the following occurs:
(a) The Maker fails to pay when due any installment of principal or
interest on this Note and such failure shall continue for a
period of ten (10) days after notice of non-payment by the
Holder to the Maker;
(b) Xxxxxxxx Family Limited Partnership has breached any provision
of this Note, other than item (a) immediately above and such
breach shall continue for a period of ten (10) days after
notice of non-payment by the Holder to the Maker;
(c) Any of Xxxxxxxx Family Limited Partnership or the Guarantor, as
applicable, shall have breached a provision of the Settlement
Agreement or defaulted under the Pledge and Security Agreement
or the Unconditional Guaranty (collectively, this Note, the
Settlement Agreement, the Pledge and Security Agreement and the
Unconditional Guaranty are herein referred to as the
"Settlement Documents");
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(d) Discovery that any representation, warranty or statement made
in any of the Settlement Documents or any certificate, report
or opinion delivered pursuant hereto or in connection herewith
was incorrect, incomplete or misleading in any material respect
on or as of the date made or deemed made;
(e) A change of greater than twenty-five percent (25%) in ownership
interest shall occur in the ownership or control of Xxxxxxxx
Family Limited Partnership or Xxxxxxxx Family Corporation
(except (i) as expressly contemplated in the Settlement
Documents, or (ii) a change resulting from the death of one or
more partners);
(f) Xxxxxxxx Family Limited Partnership dissolves, terminates,
merges, reorganizes, consolidates, changes its general partner
or sells or otherwise transfers a material portion of its
assets (except as expressly contemplated in the Settlement
Documents);
(g) Xxxxxxxx Family Corporation dissolves, terminates, merges,
reorganizes, consolidates, sells or otherwise transfers a
material portion of its assets (except as expressly
contemplated in the Settlement Documents);
(h) Xxxxxxxx Family Limited Partnership shall: (i) make a general
assignment for the benefit of creditors, (ii) file a petition,
pleading or motion under any bankruptcy or other law for the
relief or aid of debtors seeking reorganization, liquidation,
dissolution or other relief as a debtor or (iii) consent to or
acquiesce in the appointment of a receiver, custodian,
liquidator, trustee or other similar official, for the whole or
any substantial part of its assets, or for any part of any
collateral securing this Note; or
(i) A petition, pleading or motion shall be filed (i) against
Xxxxxxxx Family Limited Partnership under any bankruptcy or
other law for the relief of or aid of debtors seeking
reorganization, liquidation, dissolution or other debtor relief
for such person or (ii) seeking to appoint a receiver,
custodian, liquidator, trustee or other similar official for
Xxxxxxxx Family Limited Partnership, for the whole or any
substantial part of its assets, or for any part of any
collateral securing this Note, and such petition, pleading or
motion is not dismissed within thirty (30) days after the
filing thereof, or any order for relief or appointment entered
as a result of the filing of such petition, pleading or motion
is not stayed within seven (7) days after the entry thereof.
In the event that the Maker fails to pay in full any installment due
hereunder on or before its due date, in addition to the penalty, interest and
acceleration provisions herein set forth, the Maker agrees to pay all costs and
expenses incurred by the Holder in connection with the enforcement of this Note,
the collection of the indebtedness evidenced hereby, the collection of any
judgment rendered hereon, and/or the defense of any claim arising out of, or in
any way related to this Note, including, without limitation, reasonable
attorneys' fees.
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The Maker, any co-maker, or endorser of, or grantor of collateral with
respect to, this Note and all others who may become liable for all or any part
of this obligation, agree hereby to be jointly and severally bound, and jointly
and severally waive and renounce any and all homestead and other exemption
rights and the benefit of all valuation and appraisement privileges as against
the debt or any renewal or extension thereof, and further waive demand, protest,
notice of non-payment (except as otherwise provided herein) and any and all lack
of diligence or delays in collection or enforcement hereof, and expressly
consent to any extension of time, release of any party liable for this
obligation, release of any of the collateral for this Note, acceptance of other
collateral for this Note, or any other indulgence or forbearance whatsoever. Any
such extension, release, modification, indulgence or forbearance under this Note
may be made without notice to such party and without in any way affecting the
personal liability of such party.
THE UNDERSIGNED, XXXXXXXX FAMILY LIMITED PARTNERSHIP, HAS MADE,
CONSTITUTED AND APPOINTED, AND BY THESE PRESENTS DOES HEREBY IRREVOCABLY APPOINT
X. XXXXX STREET, III AND XXXXXXX X. XXXXXX, AS ITS TRUE AND LAWFUL
ATTORNEYS-IN-FACT, EITHER OF WHOM IS HEREBY AUTHORIZED FOR THE UNDERSIGNED AND
IN THE NAME OF THE UNDERSIGNED TO CONFESS JUDGMENT AGAINST THE UNDERSIGNED IN
FAVOR OF THE HOLDER OF THIS NOTE IN THE CLERK'S OFFICE OF THE CIRCUIT COURT OF
THE CITY OF RICHMOND, VIRGINIA OR IN ANY OTHER COURT OF PROPER JURISDICTION, FOR
THE UNPAID BALANCE OF THE INDEBTEDNESS EVIDENCED BY THIS NOTE, PLUS INTEREST,
COSTS, EXPENSES AND ATTORNEYS' FEES AS SPECIFIED HEREIN UPON THE OCCURRENCE OF A
DEFAULT UNDER THIS NOTE. THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN
INTEREST. THIS POWER OF ATTORNEY SHALL NOT TERMINATE IN THE EVENT OF THE
DISSOLUTION OF XXXXXXXX FAMILY LIMITED PARTNERSHIP.
The undersigned stipulates that this Note shall be governed by and
construed under the laws of the Commonwealth of Virginia, without reference to
its conflicts of laws provisions.
No amendment, modification, termination, or waiver of any provision of
this Note, nor any consent to any departure by the Maker from any term of this
Note, shall in any event be effective unless it is in writing and signed by the
party against whom such action is sought to be enforced, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose given. In the event that any provision of this Note is determined to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of the remaining provisions of this Note.
-4-
All notices, requests and demands to or upon the respective parties
shall be in writing and shall be deemed to have been given or made when
delivered in person or received via certified mail, postage prepaid, return
receipt requested, addressed:
In the case of the Holder to: Xxxxxxxx Adhesives, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
with a copy to: Xxxxxxx X. Xxxxxx, Esquire
Williams, Mullen, Christian & Xxxxxxx
0000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
In the case of the Maker to: Xxxxxxxx Family Limited Partnership
c/o Xxxxxx X. Xxxxxxxx, Xx.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to: Xxxx X. Xxxx, III, Esquire
Spotts, Smith, Xxxx & Xxxx
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
or to such other addresses as may be specified by any party in a written notice
given to the other parties.
This Note shall apply to and bind the Maker, and its respective
successors and assigns.
[SIGNATURES ON NEXT PAGE]
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WITNESS the following signature.
MAKER:
XXXXXXXX FAMILY LIMITED PARTNERSHIP
By: Xxxxxxxx Family Corporation,
Its General Partner
By: _______________________________________
Xxxxxx X. Xxxxxxxx, Xx.,
Its President
EIN:
Address: 0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
COMMONWEALTH OF VIRGINIA,
CITY/COUNTY OF _________, to wit:
The foregoing instrument was acknowledged before me, a notary public in
and for the jurisdiction aforesaid, this ____ day of April, 1998, by
____________________, President of Xxxxxxxx Family Corporation, which is the
General Partner of Xxxxxxxx Family Limited Partnership, on behalf of the
partnership.
___________________________________
Notary Public
My commission expires: __________
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EXHIBIT 3
[EXECUTION COPY]
UNCONDITIONAL GUARANTY
This UNCONDITIONAL GUARANTY (this "Guaranty") dated as of the 8th day
of April, 1998 (the "Guaranty") is given by XXXXXX X. XXXXXXXX, XX. (the
"Guarantor"), resident of Petersburg, Virginia, to Xxxxxxxx Adhesives, Inc., a
Virginia corporation (the "Corporation").
WHEREAS, the Corporation, Xxxxxxxx Industries, Inc., a Virginia
corporation ("Xxxxxxxx Industries"), Xxxxxxxx Family Limited Partnership (the
"Partnership"), H. Xxxxxx Xxxxxxxx, Xx. and the Guarantor have entered into a
certain Settlement Agreement dated April 8, 1998 (the "Settlement Agreement")
regarding the settlement of certain claims of the Corporation and Xxxxxxxx
Industries against H. Xxxxxx Xxxxxxxx , Xx.; and
WHEREAS, the Corporation is unwilling to enter into and perform the
Settlement Agreement unless it receives a guaranty from the Guarantor, who is a
limited partner of the Partnership and the parent of H. Xxxxxx Xxxxxxxx, Xx.,
with respect to the Liabilities, as hereinafter defined, of H. Xxxxxx Xxxxxxxx,
Xx. to the Corporation.
AGREEMENT:
NOW THEREFORE, for and in consideration of the premises, and other good
and valuable consideration, the receipt and adequacy of which the parties hereby
acknowledge, the parties covenant and agree as follows:
Section 1. Definitions and Interpretation.
(a) Unless the context indicates otherwise, words
used in this Guaranty in the singular number will be deemed to include words in
the plural number, and vice versa, and words in one gender will be deemed to
include words in the other genders.
(b) The section headings are for convenience only
and neither limit nor amplify the provisions of this Guaranty.
(c) The term "Note" as used shall refer to that
certain Promissory Note dated April 8, 1998 made by the Partnership payable to
the Corporation in the original face amount of $375,000.00.
(d) The term "Pledge and Security Agreement" shall
refer to that certain Pledge and Security Agreement dated April 8, 1998 by and
between the Partnership and the Corporation.
(e) The term "Debtor" shall refer to the
Partnership.
(f) The term "Bankruptcy Code" shall refer to Title
11 of the United States Code.
Section 2. Guaranty. The Guarantor hereby unconditionally
guarantees to the Corporation, without offset or deduction, the full and prompt
payment of (a) the obligations evidenced by the Note, and all renewals,
extensions, modifications and substitutions therefor, and (b) the reimbursement
to the Corporation for any and all costs, expenses and reasonable attorney's
fees incurred in connection with either the collection of the Note or the
protection of the Corporation's security, rights or remedies with respect to the
Note or this Guaranty. The foregoing listed in (a) and (b) shall be herein
referred to as the "Liabilities."
Section 3. Guaranty Unconditional. The duties and obligations of
the Guarantor hereunder will be absolute, continuing and unconditional. Without
limiting the generality of the foregoing, this Guaranty will not be released,
discharged or otherwise affected by:
(a) any extension, renewal, compromise, settlement,
waiver or release of any of the Liabilities of any other maker, endorser or
guarantor (each of the foregoing sometimes herein referred to as a "Party")
under any instrument or document evidencing, guaranteeing or securing any of the
Liabilities including without limitation the Note, the Pledge and Security
Agreement, this Guaranty and the Settlement Agreement (collectively, the
"Settlement Documents");
(b) any amendment, modification or supplement to the
Note, the Pledge and Security Agreement, the Settlement Agreement or any other
Settlement Document;
(c) any failure to perfect a lien granted by any of
the Settlement Documents with respect to any of the Pledged Collateral (as
defined in the Pledge and Security Agreement), the release of any such lien or
the substitution or exchange of any security for any of the Liabilities;
(d) any change in the structure, existence or
ownership of the Debtor or the filing or entry of a final order in any
insolvency, bankruptcy, reorganization or other similar proceeding affecting the
Debtor or its assets or releasing any Party from any of its obligations under
any of the Settlement Documents;
(e) the existence of any claim, set-off or other
right that the Guarantor may have at any time against the Debtor, the
Corporation or any Party, whether arising from the execution of any of the
Settlement Documents or otherwise, provided that nothing contained herein will
prevent the assertion of such a claim in a separate suit;
(f) the unenforceability, for any reason, of any of
the duties or obligations of any Party under any of the Settlement Documents;
(g) the Corporation selling, exchanging, releasing,
surrendering, realizing upon or otherwise dealing with or in any manner and in
any order any collateral or security at any time held by or available to the
Corporation for any Liability, or for the obligation of the Guarantor, or for
the obligation of any person secondarily or otherwise liable for any of the
Liabilities;
(h) the failure of the Corporation: (i) to file or
enforce a claim against any other Party (or its estate in a bankruptcy or other
proceeding); (ii) to give notice of the creation or incurring by any Party of
any new or additional indebtedness or obligation with respect to a Liability or
under the Settlement Documents; (iii) to commence any action against any Party;
(iv) to disclose to the
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Guarantor any facts that the Corporation may now or hereafter know with regard
to the Debtor; or (v) to proceed with due diligence to collect any amount due to
it under any of the Settlement Documents or to realize upon any collateral for a
Liability; or
(i) any other act, failure to act or delay of any
kind by the Debtor, any Party or the Corporation that might, but for the
provisions of this Section 3, constitute a legal or equitable discharge of the
Guarantor's obligations hereunder.
Section 4. Discharge; Reinstatement in Certain Circumstances. This
Guaranty will remain in full force and effect until the principal and interest
of the Note and all of the other Liabilities have been paid or performed in full
and until a period of one (1) year, beginning with the date of the last payment
made by or on behalf of the Debtor, has elapsed during which no petition in
bankruptcy has been filed by or against the Debtor or any other Party. If at any
time any payment or performance by the Debtor under any of the Settlement
Documents is rescinded or is required to be restored or returned because of
insolvency, bankruptcy, reorganization or otherwise, the Guarantor's obligations
hereunder with respect to such payment or performance will be reinstated as
though such payment had been due or performance required, but not paid or
performed at the time of such rescission or requirement. The Guarantor agrees
that payment or performance of any of the Liabilities or other acts that toll
any statute of limitations applicable to the Liabilities will also toll the
statute of limitations applicable to the Guarantor's liability hereunder.
Section 5. Subrogation. The Guarantor shall not exercise any right
of subrogation in and to the Liabilities or to all or any part of Corporation's
interest therein, until the Liabilities have been paid in full.
Section 6. Subordination. The Guarantor hereby subordinates all
indebtedness of the Debtor owing to the Guarantor, whether now existing or
hereafter arising, to the full and prompt payment and performance, as and when
due, of all of the Liabilities, together with all interest thereon and all
costs, expenses and reasonable attorneys' fees in connection therewith. Any
amount received by the Guarantor as payment on or with respect to the
subordinated indebtedness subsequent to any default in the payment or
performance of the Liabilities will be retained and held in trust by the
Guarantor solely for the benefit of the Corporation.
Section 7. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Debtor pursuant to the Settlement Documents
is stayed upon insolvency or bankruptcy, such amount and all other amounts
subject to acceleration under the terms of the Settlement Documents will,
nevertheless, be due and payable by the Guarantor on demand by the Corporation.
Section 8. Rights of Corporation Not Impaired. No lawful act or
omission of any kind or at any time by the Corporation in respect of any matter
whatsoever will in any way affect or impair the rights of the Corporation to
enforce any right, power or benefit of the Corporation under this Guaranty, and
no set-off, claim, diminution of any obligation, or defense of any kind or
nature that the Guarantor has or may have against the Corporation will be
available against the Corporation in any suit or action brought by the
Corporation to enforce any of its rights under this Guaranty. Nothing in this
Guaranty will be construed as a waiver by the Guarantor of any rights or claims
he may have against the Corporation under this Guaranty or otherwise, but any
recovery upon such rights and claims will be had from the Corporation
separately, it being the intent of this Guaranty that the Guarantor shall be
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obligated, unconditionally and absolutely, to perform fully all of his
obligations hereunder for the benefit of the Corporation.
Section 9. Debtor's Affairs. The Guarantor represents to the
Corporation that the Guarantor has knowledge of the Debtor's financial condition
and affairs and agrees that the Guarantor will keep himself informed of the
Debtor's financial condition and affairs so long as this Guaranty is in force.
The Guarantor further agrees that the Corporation will have no obligation to
investigate the Debtor's financial condition or affairs for the benefit of the
Guarantor or to advise the Guarantor of any fact respecting, or any change in,
the Debtor's financial condition or affairs that might come to the knowledge of
the Corporation at any time, whether or not the Corporation knows or believes or
has reason to know or believe that any such fact or change is unknown to the
Guarantor or might (or does) materially increase the risk of the Guarantor
hereunder.
Section 10. Representations of Guarantor. The Guarantor hereby
represents and warrants the following to the Corporation:
(a) The Guarantor is fully capable and empowered
(being under no legal restriction, limitation or disability) to enter into,
execute and deliver this Guaranty and to perform his obligations hereunder.
(b) He has duly executed and delivered this Guaranty
for valuable legal consideration, and this Guaranty constitutes the valid and
binding obligation of the Guarantor enforceable in accordance with its terms,
except as such enforceability may be affected by bankruptcy and other insolvency
laws and general principles of equity.
(c) Other than a certain lawsuit in the United
States District Court for the District of Colorado, Civil Action No. 97-D-2214,
styled Xxx Xxxxxxxxx, Minority Shareholder of Record, et al. x. Xxxxxxxx
Industries, Inc., et al., there are no pending or, to the best of the
Guarantor's knowledge, threatened actions, suits, proceedings or investigations
of a legal, equitable, regulatory, administrative or legislative nature that, if
adversely determined, might have a material adverse effect on his business,
assets, condition (financial or otherwise) or prospects or his ability to
perform the Guarantor's obligations under this Guaranty.
(d) To the best of his knowledge, after due inquiry,
no event that would constitute an Event of Default has occurred or is
continuing.
Section 11. Financial Statements. The Guarantor will furnish to the
Corporation, upon request by the Corporation, within 120 days after the end of
each calendar year, a statement of the Guarantor's financial condition, as of
the end of such calendar year, in such detail as the Corporation may reasonably
request.
Section 12. Corporation's Right of Set-Off. Upon the occurrence of
any Event of Default, the Corporation is hereby irrevocably authorized, at any
time and from time to time without notice to the Guarantor, any such notice
being expressly waived, to set-off, appropriate and apply any amount, including
any account, rebate, holdback or claim, whether or not matured, owing by the
Corporation to or for the account of the Guarantor, or any part thereof, against
the obligations of the Guarantor to the Corporation hereunder. The rights of the
Corporation under this Section 12 are in
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addition to any other rights and remedies that the Corporation may have.
Section 13. Venue. The Guarantor agrees that any suit, action or
proceeding arising out of or relating to this Guaranty may be instituted in the
Circuit Court of the City of Richmond, Virginia, or in the United States
District Court for the Eastern District of Virginia, Richmond Division (to the
extent that such court has jurisdiction), at the option of the Corporation, and
the Guarantor hereby waives any objection that he may have to such venue and
irrevocably submits to the jurisdiction of either of such courts in any such
suit, action or proceeding. Nothing herein will affect the right of the
Corporation to proceed against the Guarantor in any other jurisdiction.
Section 14. Subsequent/Prior Guaranty. A subsequent guaranty by the
Guarantor will not be deemed to be in lieu of or to supersede or terminate this
Guaranty, but will be construed as an additional or supplemental guaranty unless
otherwise expressly provided therein; and in the event that the Guarantor has
given the Corporation a previous guaranty or guaranties, this Guaranty will be
construed to be an additional or supplemental guaranty, and not in lieu thereof
or to terminate such previous guaranty or guaranties, unless expressly so
provided herein or therein.
Section 15. Events of Default. Any one or more of the following
events shall constitute a default ("Event of Default") under this Guaranty:
(a) False Statement: If any certificate,
representation, warranty, statement or other writing made herein or heretofore,
now or hereafter furnished to the Corporation by or on behalf of the Guarantor
in connection with the Settlement Documents is discovered to have been
incorrect, incomplete or misleading in any material respect on or as of the date
made or deemed made;
(b) Termination of Liability: If the Guarantor seeks
to terminate the Guarantor's liability under this Guaranty; or
(c) Default by Debtor: Default by the Debtor under
the Note or the Pledge and Security Agreement or a breach by the Partnership of
the Settlement Agreement.
Section 16. Remedies. Whenever any Event of Default shall have
happened and be continuing, the Corporation or other holder of any of the
Liabilities (a) may declare the entire unpaid principal of and interest on the
Liabilities to be immediately due and payable, (b) may take whatever action
under the Settlement Documents, at law or in equity, as may appear necessary or
desirable to collect payments then due or thereafter to become due hereunder or
to enforce observance or performance of any covenant, condition or agreement of
the Guarantor under this Guaranty, or (c) may, immediately and without further
action by the Corporation, set-off against any obligation of the Guarantor to
the Corporation hereunder, all money owed by the Corporation in any capacity to
the Guarantor and to apply the same against the Liabilities.
Section 17. Successors and Assigns. This Guaranty will inure to the
benefit of and be binding on the parties and their respective heirs, personal
representatives, successors and assigns.
Section 18. Severability. If any provision of this Guaranty or the
application thereof in any circumstance is held to be unenforceable, the
remainder of this Guaranty will not be affected thereby and will remain
enforceable.
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Section 19. Applicable Law. This Guaranty will be governed by, and
construed in accordance with, the laws of the Commonwealth of Virginia.
Section 20. Notices, Demands and Requests. All notices, demands,
requests and other communications required or permitted hereunder must be in
writing and will be deemed to have been given when delivered in person or
received by certified mail, postage prepaid, return receipt requested, (i) to
the Guarantor, at his address set forth below opposite his signature, and (ii)
to the Corporation, at its address set forth in the Note, or to such other
persons or addresses as the party entitled to notice has specified in writing to
the other parties from time to time.
Section 21. Waiver. The Guarantor hereby waives, to the extent
permitted by law, (i) the benefits of Sections 49-25 and 49-26 of the Code of
Virginia (1950), as amended, and any amendments thereto or any similar statutes
or rules of law, (ii) the benefit of any homestead or similar exemption, state
or federal, with respect to his obligations hereunder, (iii) notice of any of
the matters referred to in Section 3 of this Guaranty, (iv) notice of acceptance
of this Guaranty, (v) presentment and demand for payment of any of the
Liabilities, (vi) protest and notice of dishonor or nonpayment of any Liability,
and (vii) any demand (except as expressly specified herein), proof or notice of
nonpayment, or failure to pay or perform any of the Liabilities.
Section 22. Amendments. This Guaranty may only be amended,
supplemented or terminated in writing, signed by all of the parties.
Section 23. Entire Agreement. This Guaranty expresses the entire
understanding, and all agreements, between the parties with respect to the
subject matter hereof.
Section 24. Appointment of Secretary of the Commonwealth. If the
Corporation is unable to obtain prompt legal service upon the Guarantor at the
address shown for the Guarantor herein, the Guarantor hereby appoints the
Secretary of the Commonwealth of Virginia as his agent for the acceptance of
substituted service of process upon the Guarantor. It is understood and agreed
that the Guarantor hereby submits to the in personam jurisdiction of any duly
constituted Court of the Commonwealth of Virginia (upon compliance with the
procedural laws and rules of the Commonwealth of Virginia) wherein any action
may be brought by the holder of any Obligation.
Section 25. Notice. YOU ARE GUARANTEEING THE OBLIGATIONS DESCRIBED
IN THIS GUARANTY. IF FOR ANY REASON THE DEBTOR DOES NOT PAY OR PERFORM THE
DEBTOR'S OBLIGATIONS, YOU WILL HAVE TO PAY OR PERFORM THE DEBTOR'S OBLIGATIONS
AT YOUR EXPENSE. UPON DEFAULT, THE CORPORATION CAN COLLECT ALL OF THE
OBLIGATIONS FROM YOU WITHOUT FIRST ATTEMPTING TO COLLECT FROM THE DEBTOR. BY
SIGNING THIS GUARANTY, YOU AGREE THAT YOU HAVE RECEIVED COPIES OF AND HAVE HAD
AN OPPORTUNITY TO REVIEW ALL OF THE DOCUMENTS REFERRED TO IN THIS GUARANTY AND
THE DOCUMENTS DESCRIBED THEREIN WITH YOUR COUNSEL AND UNDERSTAND THE NATURE,
EXTENT, AND LEGAL AND PRACTICAL CONSEQUENCES OF YOUR LIABILITY UNDER THIS
GUARANTY.
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WITNESS the following signature.
________________________________________
Xxxxxx X. Xxxxxxxx, Xx.
Address: 0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
COMMONWEALTH OF VIRGINIA )
) to-wit:
CITY/COUNTY OF RICHMOND )
The foregoing instrument was acknowledged before me this 10th day of
April, 1998, by Xxxxxx X. Xxxxxxxx, Xx.
My commission expires: __________
________________________________
Notary Public
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EXHIBIT 4
SOLVENCY CERTIFICATE
This Certificate is delivered in connection with the Settlement
Agreement (the "Settlement Agreement"), dated April 8th, 1998, between Xxxxxxxx
Industries, Inc. (the "Company"), Xxxxxxxx Adhesives, Inc. ("Xxxxxxxx
Adhesives"), the Xxxxxxxx Family Limited Partnership (the "Partnership"), H.
Xxxxxx Xxxxxxxx, Xx. and Xxxxxx X. Xxxxxxxx, Xx. and related documents,
including but not limited to (i) a Promissory Note, dated April 8th, 1998,
payable to Xxxxxxxx Adhesives by the Partnership, (ii) a Pledge and Security
Agreement, dated April 8th, 1998, between the Partnership and Xxxxxxxx
Adhesives, and (iii) and Unconditional Guaranty, dated April 8th , 1998, by
Xxxxxx X. Xxxxxxxx, Xx. for the benefit of Xxxxxxxx Adhesives.
The undersigned are and, at all pertinent times mentioned herein, have
been officers of Xxxxxxxx Family Corporation (the "General Partner") which in
turn is and has been at all pertinent times mentioned herein the General Partner
of the Partnership. The General Partner has responsibility for the management of
the financial affairs of the Partnership and the undersigned officers of the
General Partner have acted on behalf of the Partnership in connection with the
negotiation and execution of all documents related to the Settlement Agreement
(collectively, including the Settlement Agreement, the "Settlement Documents")
to which the Partnership is a party, including the review of the affairs of the
Partnership and meeting and conferring with representatives of the Company and
Xxxxxxxx Adhesives and their counsel and in furnishing information to the
Company and Xxxxxxxx Adhesives to be used in the analyses prepared by them.
The undersigned officers of the General Partner have carefully reviewed
the contents of this Certificate. The statements made herein are based on the
undersigneds' personal knowledge of the Partnership, or upon reports or other
information available concerning the Partnership which, in the opinions of the
undersigned, are reliable. The statements made herein are made in good faith and
to the best of the knowledge and belief of the undersigned, and are accurate in
all material respects. Accordingly, the undersigned certify as follows:
1. The Partnership is not now, nor will the consummation of any of
the transactions related to the Settlement Documents (the "Settlement") render
it insolvent as defined in Chapter 11, Section 101(32) of the United States
Code.
2. After the consummation of the Settlement, by the incurrence of
its obligations under the Settlement Documents to which it is a party, the
Partnership will not incur debts beyond its ability to pay them as they mature.
3. Consummation of the Settlement will not leave the Partnership
with unreasonably small capital or with remaining assets that are unreasonably
small. The Partnership and the undersigned have agreed that "unreasonably small
capital" depends on the nature of the particular business or businesses
conducted or to be conducted. The undersigned has reached this conclusion based
on the needs and anticipated needs for capital of the businesses conducted
or anticipated to be conducted by the Partnership in light of the Partnership's
available credit capacity.
4. The Partnership has not participated in the Settlement, executed
the Settlement Documents to which it is a party or made any transfer or incurred
any obligations thereunder, with actual intent to hinder, delay or defraud
either present or future creditors of the Partnership or any creditors of the
partners of the Partnership.
5. The Settlement Documents to which it is a party were executed
and delivered by the Partnership in good faith and, to the best of the knowledge
of the undersigned, the indebtedness of the Partnership incurred pursuant to the
Settlement Documents and the security interests granted to the Company under the
Settlement Documents were incurred in good faith and granted for fair and
reasonably equivalent value.
6. The Partnership does not intend to incur, or believe it will
incur, debts beyond its ability to pay them as they mature.
7. All items of indebtedness of the Partnership are current in
accordance with their respective terms and are not past due.
The undersigned understands that the Company is relying on the
foregoing statements in connection with the extension of credit to the
Partnership pursuant to the Settlement Documents. The undersigned are executing
this Certificate on behalf of the Partnership in their respective capacities as
officers of the General Partner.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
8th day of April, 1998.
XXXXXXXX FAMILY LIMITED PARTNERSHIP
By: Its General Partner,
XXXXXXXX FAMILY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
-----------------------------------
Xxxxxx X. Xxxxxxxx, Xx., President
By: /s/ Irvine X. Xxxxxxxx
-----------------------------------
Irvine X. Xxxxxxxx, Vice President
EXHIBIT 5
[LETTERHEAD OF SPOTTS, SMITH, XXXX & XXXX]
April 8, 1998
Xxxxxxxx Industries, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxxx Adhesives, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
We have acted as counsel for Xxxxxxxx Family Limited Partnership, a
Virginia limited partnership ("the Partnership"), its general partner, Xxxxxxxx
Family Corporation, a Virginia corporation (the "General Partner") and Xxxxxx X.
Xxxxxxxx, Xx. ("X. Xxxxxxxx") in connection with the settlement (the
"Settlement") entered into pursuant to that certain Settlement Agreement (the
"Settlement Agreement") dated April 8, 1998, by and among the Partnership, H.
Xxxxxx Xxxxxxxx, Xx. ("X. Xxxxxxxx"), X. Xxxxxxxx, Xxxxxxxx Industries, Inc.
(the "Company") and Xxxxxxxx Adhesives, Inc. ("Xxxxxxxx Adhesives"). In
connection therewith, we have been asked to deliver certain opinions to you.
We have examined (a) the Promissory Note executed by the Partnership as
maker, payable to Xxxxxxxx Adhesives (the "Note"); (b) the Pledge and Security
Agreement (the "Pledge and Security Agreement"), between the Partnership and
Xxxxxxxx Adhesives, granting a security interest to Xxxxxxxx Adhesives in
2,325,000 shares of the Company's common stock held by the Partnership (the
"Pledged Shares"); and (c) certain Stock Powers endorsed in blank by the
Partnership relating to the Pledged Shares (all such documents collectively
referred to as the "Settlement Documents"). We have also examined such other
corporate and partnership documents and records and made such investigation as
we have deemed necessary to enable us to render the opinions expressed herein.
With respect to the various factual matters material to our opinions,
we have relied, to the extent that we deem such reliance proper, upon
certificates from officers of the General Partner and upon certificates of
public officials. We have assumed the correctness of the factual matters
contained in such reliance sources and have not acquired any information giving
us knowledge, without any independent investigation for the purpose, that such
factual matters are incorrect.
We have assumed (i) except with respect to the Partnership, the General
Partner and X. Xxxxxxxx, the genuineness of all signatures on and the due
authorization, execution, and delivery of the Settlement Documents and the
validity and binding effect thereof, (ii) the authenticity of all documents
submitted to us as originals, (iii) the conformity to the originals of all
documents submitted to us as copies, and (iv) the legal capacity of natural
persons.
Based on and subject to the foregoing, it is our opinion that:
1. The execution, delivery and performance by the Partnership of
the Settlement Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly authorized by all necessary
proceedings of the Partnership, and the Partnership has duly and validly
executed and delivered the Settlement Documents to which it is a party.
2. The Settlement Documents to which the Partnership is a party are
legal, valid and binding obligations of the Partnership and are enforceable
against the Partnership in accordance with their respective terms, except to the
extent that enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforceability is considered in an action at law or a suit in equity),
including the availability of equitable remedies, (iii) procedural requirements
of the law applicable to the exercise of creditors' rights generally, and (iv)
judicial discretion inherent in the forum addressing enforceability.
The opinions expressed above are subject to the following additional
assumptions and qualifications:
1. The opinions herein expressed are limited in all respects solely
to matters governed by the internal laws of the Commonwealth of Virginia and the
federal laws of the United States of America. We express no opinion as to the
substance or effect of the laws of any other jurisdiction.
2. Whenever we state our opinion to be "to our knowledge" or "known
to us," we mean that our attorneys who have given substantive legal attention to
representation of the Partnership, the General Partner and X. Xxxxxxxx in the
transaction have not made an investigation to acquire, and have not acquired,
actual knowledge of the existence or absence of the facts forming the basis for
such opinion but without such investigation do not have information which
contradicts the existence or absence of the facts forming the basis for such
opinion. Indeed, this Firm began its representation of the Partnership on March
17, 1998 and the nature of the representation is limited to the structuring and
closing of the Settlement and related Settlement Documents.
We assume no responsibility for any changes, material or otherwise,
which may hereinafter occur including modifications to the Settlement Documents,
nor do we assume any responsibility
for or render any opinion on transactions, events, circumstances, omissions,
acts or documents which occur after the date hereof. We have no obligation to
communicate any such changes.
This opinion is issued solely for the benefit of you and your
successors and assigns and is not to be relied upon by any other person or
entity, and may not be copied, reproduced or disseminated to any person, other
than the named addressees for any reason.
Very truly yours,
/s/ SPOTTS, SMITH, XXXX & XXXX, P.C.
EXHIBIT 6
CLOSING MEMORANDUM
FOR
H. XXXXXX XXXXXXXX, XX. SETTLEMENT
April 8, 1998
The following documents are to be delivered to Xxxxxxxx Industries,
Inc. (the "Company") and Xxxxxxxx Adhesives, Inc. ("Xxxxxxxx Adhesives") at or
prior to the closing (the "Closing"), of the transactions contemplated by that
certain Settlement Agreement, (the "Settlement Agreement") between the Company,
Xxxxxxxx Adhesives, Xxxxxxxx Family Limited Partnership (the "Partnership"), H.
Xxxxxx Xxxxxxxx, Xx. and Xxxxxx X. Xxxxxxxx, Xx., dated April 8, 1998, such
Closing to be held April 10, 1998, at the offices of Williams, Mullen, Christian
& Xxxxxxx:
1. Settlement Agreement (executed April 8, 1998).
2. Promissory Note executed by the Partnership as maker, payable to Xxxxxxxx
Adhesives.
3. Pledge and Security Agreement (the "Pledge Agreement") between the
Partnership and Xxxxxxxx Adhesives, whereby the Partnership grants a
first priority security interest to Xxxxxxxx Adhesives in 2,325,000
shares of the Company's common stock held by the Partnership (the
"Pledged Shares").
4. Stock Powers (2) endorsed in blank by the Partnership for stock
certificates evidencing the Pledged Shares.
5. Certificates Nos. 3673 and 3674 evidencing all of the Pledged Shares.
6. Unconditional Guaranty, executed by Xxxxxx X. Xxxxxxxx, Xx. guaranteeing
payment of the Promissory Note.
7. Legal opinion of counsel for the Partnership.
8. Solvency Certificate, to be executed by the Partnership.
9. Financial statements as of the Closing, for H. Xxxxxx Xxxxxxxx, Xx.
10. Financial statements as of the Closing, for Xxxxxx X. Xxxxxxxx, Xx.
(post-closing).
11. Financial statements as of the Closing, for the Partnership.
12. Good Standing Certificate for Xxxxxxxx Family Corporation.
13. Certificate of Existence for the Partnership.
14. Resolutions, properly executed by all partners of the Partnership,
approving all transactions contemplated by the Settlement Agreement.
15. General Partner's Certificate, executed by Xxxxxxxx Family Corporation.
16. Officer's Certificate of Xxxxxxxx Family Corporation.
17. Action in Writing of the shareholders and the Board of Directors of
Xxxxxxxx Family Corporation.
18. Check from H. Xxxxxx Xxxxxxxx, Xx., payable to Xxxxxxxx Adhesives in the
amount of $10,000.00, representing cash payment pursuant to the
Settlement Agreement.
19. Check from Xxxxxx X. Xxxxxxxx, Xx., payable to Xxxxxxxx Adhesives in the
amount of $2,812.50, representing the initial interest payment under the
Note.
20. Consent Judgment of H. Xxxxxx Xxxxxxxx, Xx., filed with the Clerk of the
Court of Sussex County, Virginia (filed stamped copy).
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