Exhibit 10.40 Promissory Note and Settlement Agreement with Xxxxxxx XxXxxx
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is made by and among Xxxxxxx XxXxxx
("Xxxxxx"), Pacific Printing & Embroidery, L.L.C. ("PPE"), Print Works, Inc.
("Print Works") and American Resources and Development Company ("ARDCO").
WHEREAS, XxXxxx filed a complaint eventually of venue in the Circuit Court of
the State of Oregon for the County of Multnomah, Case No.9908-08692 (the
"Action") against PPE, Print Works, and ARDCO alleging the failure of PPE and
Print Works to pay certain amounts to XxXxxx for a loan and wages, and further
alleging that the payment of such amounts were guaranteed by ARDCO (the
"Action"); and
WHEREAS, PPE, Print Works, and ARDCO alleged counterclaims against XxXxxx
arising out of the performance of services provided by XxXxxx and certain
actions taken by XxXxxx;
WHEREAS, PPE is the maker of a promissory note dated September 1, 1996 payable
to the Pershing Group, as Trustee of the Xxxxxxx XxXxxx SEP XXX, a true copy of
which is attached as Exhibit "A" (the "Note"); and
WHEREAS, the parties now desire to fully and finally settle all claims and
counterclaims made in the Action, and such other actual or potential
controversies or disputes which do or might now exist, whether known or unknown,
that XxXxxx may have against PPE, Print Works, and/or ARDCO, and that PPE, Print
Works, and/or ARDCO may have against XxXxxx; and
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WHEREAS, the parties further desire to supersede the terms of the Note and
provide for a payment schedule, the xxxx performance of which will constitute
hall satisfaction of the Note;
NOW, THEREFORE, in consideration of the premises, mutual covenants, and
agreements hereinafter set forth, and intending to be legally bound hereby, the
parues agree as follows;
1. PPE, Print Works, and ARDCO agree to pay XxXxxx the sum of One Hundred Ninety
Thousand Dollars ($190,000.00), which shall be made in installments over a
nineteen month period in the following amounts at the following times: a payment
of Five Thousand Dollars ($5,000.00) on the twentieth of each of the six
consecutive months commencing August 2000; a payment of Seven Thousand Five
Hundred Dollars ($7,500.00) on the twentieth of each of the six consecutive
months commencing February 2001; a payment of Ten Thousand Dollars ($10,000.00)
on the twentieth or each of the six consecutive months commencing August 2001;
and a final payment of Fifty-Five Thousand Dollars on the twentieth of February
2002. All payments shall be made payable to the Xxxxxxx X. XxXxxx SEP XXX DLJ
IMS 376 003106, and each payment shall be sent by certified mail return receipt
requested and addressed as follows, Xxxxxx Investment Management. Attn, Xxxxxx
Xxxxxxx, 0000 X.X. 0xx Xxxxxx, Xxxxx 0000, Xxxxxxxx, XX 00000. Each payment
shall be deemed made on the date the payment is mailed by first class mail.
2. PPE, Print Works, and ARDCO agree to execute a confession of judgment in
favor of XxXxxx in the form attached as Exhibit "B". The confession of judgment
shall be in the amount of $327,084.39 (the "Confession Amount"). The confession
of judgment shall
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accrue interest at the rate of nine percent per annum from the date of this
agreement.
3. The parties agree that a payment default shall occur only upon a failure to
make any payment within five business days of the due date. Upon a payment
default, XxXxxx may at his option file the confession of judgment with the court
and act to collect the Confession amount plus accrued interest and less payments
made in accordance with paragraph 1.
4. The parties agree that so long as there has been no payment default, neither
XxXxxx nor any of his agents shall do any of the following: A) Participate in
any efforts to place any of PPE, Print Works, or ARDCO into involuntary
bankruptcy. B) Undertake any collection activities or seek to collect any amount
under the Note.
5. XxXxxx, for himself and on behalf of his affiliates, agents, subrogees,
representatives, predecessors, successors, assigns, and other businesses or
entities in which he has an interest, including but not limited to Graphic
Synergies, Inc., dots hereby generally release and forever discharge each of
PPE, Print Works, and ARDCO and their affiliates, shareholders, directors,
officers, members, managers, employees, agents, subrogees, representatives,
predecessors7 successors, assigns. and affiliated entities from any and all
claims, demands, damages, actions, causes of action, or suits of any kind, known
or unknown, that were or could have been made in the Action or that otherwise
may now exist.
6. Each of PPE, Print Works, and ARDCO, for themselves and on behalf of their
affiliates, shareholders, directors, officers, employees, members, managers,
agents, subrogees, representatives, predecessors, successors, assigns, and
affiliated entities do hereby generally
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release and forever discharge XxXxxx and his affiliates, agents, subrogees,
representatives, predecessors, successors, assigns, and other businesses or
entities in which XxXxxx has an interest, including but not limited to Graphic
Synergies, inc., from any and all claims, demands, damages, actions, causes of
action, or suits of any kind whatsoever, known or unknown that were or could
have been made in the Action or that otherwise may now exist.
7. Notwithstanding any other provision to this Agreement, the parties agree
that:
A. In the event XxXxxx is named as a party to any litigation, arbitration
proceeding, or administrative proceeding upon a claim that he is liable to a
third party because of or in any way related to any act or omission by any of
PPE, Print Works, or ARDCO, or any of their shareholders, officers, directors,
managers, members, employees, agents subsidiaries, or affiliated entities, then
XxXxxx may seek contribution and/or indemnity from such responsible party.
B. In the event any of PPE, Print Works, or ARDCO, or any of their shareholders,
officers, directors, managers, members, employees, agents, subsidiaries, or
affiliated entities is named as a party to any litigation, arbitration
proceeding, or administrative proceeding upon a claim that it, he, or she is
liable to a third party because of or in any way related to any act or omission
by XxXxxx, then such entity or person may seek contribution and/or indemnity
from XxXxxx.
8. XxXxxx represents that he has disclosed and discussed the modifications to
and the new repayment terms for satisfaction of the Note with the holder of the
Note, and that the holder agrees that the payments described in paragraph 1
shall constitute full and total satisfaction of the Note. XxXxxx also agrees to
obtain the express approval of the holder of
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the Note by obtaining the signature of the Holder to this Agreement, which will
constitute the agreement of the holder to the modified payment terms.
9. Upon satisfaction of all amounts described in paragraph 1, XxXxxx shall
immediately return the original note attached as Exhibit A and the original
confession of judgment to PPE.
10. Upon execution of this Agreement by the parties, the parties shall execute a
stipulated notice of dismissal, dismissing the Action with prejudice and without
an award of costs, disbursements, or attorney fees to any party.
11. The parties agree that until XxXxxx is paid the full amount identified in
paragraph 1, no officer or director of PPW, Print Works and/or ARDCO shall be
paid any amount by PPW, Print Works and/or ARDCO for the repayment of any loan
or for the redemption of any stock. XxXxxx agrees and understands that this
paragraph restricts payments to directors and officers of PPW, Print Works,
and/or ARDCO only, and no other creditor or equity owner, and does not restrict
the payment of W-2 compensation to any officer or director. XxXxxx may, at his
expense, direct that a CPA, mutually agreeable to both parties and pursuant to a
confidentiality agreement, audit the books solely to determine compliance with
this section. XxXxxx may file the confession of judgment upon a breach of this
section.
12. The parties acknowledge that this agreement involves a Compromise of
disputed claims, and that this agreement itself and its execution by the parties
is not to be construed as an admission of liability to the claims made in the
Action by any party. All parties deny all liability to all opposing parties.
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13. In making this Agreement, it is understood and agreed that each of the
undersigned specifically warrants and represents that in doing so, he or it has
been fully advised and represented by legal counsel of his or its own selection,
and in executing this Agreement he or it does so relying wholly upon his or its
own judgment and advice of counsel of his or its own independent selection, and
that he or it has been in no way influenced whatsoever regarding the matters set
forth herein, or any other matter made by any person, individual, or
corporation, or any agent, employee, or servant thereof, who is hereby released,
or by any persons representing any of them.
14. If any clause or provision in this Agreement is determined to be illegal,
invalid or unenforceable under any present or future law by the final judgment
of a court of competent jurisdiction, the remainder of this Agreement will not
be affected thereby. It is the intention of the parties that if any such
provision is held to be illegal, invalid, or unenforceable, there will be added
in lieu thereof a provision as similar in terms to that provision as is possible
and be legal, valid, and enforceable.
15. This Agreement will be interpreted and construed under the internal laws of
the State of Oregon, regardless of the domicile of any party, and will be deemed
for those purposes to have been made, executed, and performed in Portland,
Oregon. All claims, disputes, and other matters in question arising out of or
relating to this Agreement, or the breach thereof, shall be decided by the
Circuit Court of Multnomah County, Oregon.
16. The parties agree that the prevailing party in any dispute arising out of or
in any way related to this Agreement will be entitled to recover its
investigation costs, expert witness fees and costs, and attorneys' fees at the
trial court or arbitration level or any level of appeal.
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17. Before and at all times following the execution of this Agreement, the
parties agree to execute and deliver, or to cause to be executed and delivered,
those documents and to do, or cause to be done, such other acts and things as
might reasonably be requested to assure that the benefits of this Agreement are
realized by the parties.
18. This Agreement is personal to the parties herein and cannot be assigned
without the express written authorization of the other party.
19. This constitutes the entire Agreement between the parties, supersedes all
prior or contemporaneous oral or written agreements and shall not be modified
except by a document signed by the parties.
DATED: August 18, 2000
/s/ XXXXXXX XXXXXX
Dated September 26, 2000.
PACIFIC PRINTING & EMBROIDERY, LLC
/s/ Xxxxxxx Xxxxxx, Manager
DATED: September 26, 2000.
PRINT WORKS, INC.
/s/ Xxxxxxx Xxxxxx, Manager
DATED: September 26, 2000.
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
/s/ B. Xxxxxx Xxxxxxxxx, President
