SETTLEMENT AGREEMENT
AGREEMENT dated as of May 12, 2000 by and among F&A Dairy Products,
Inc., a Wisconsin corporation ("F&A"), Ferro Foods Corporation, a New York
corporation ("Ferro"), Xxxxx Xxxxxxx ("FG"), Xxxxx Xxxxx, Xx. ("FF") and Liberty
Food Group, LLC, a Delaware limited liability company ("Liberty").
W I T N E S S E T H :
WHEREAS, a motion for a temporary restraining order was filed by F&A
against Ferro and Liberty in the United States District Court, Western District
of Wisconsin on February 22, 2000 (the "Action"), a copy of which is attached
thereto as Exhibit A;
WHEREAS, the parties hereto agreed to settle the Action pursuant to the
terms and provisions of a letter agreement dated February 25, 2000 from Xxxxxxx,
Xxxxxxxxx LLP, counsel to Liberty, to Winthrop & Weinstine, P.A., counsel to F&A
(the "Letter Agreement"), a copy of which is attached hereto as Exhibit B, and
to incorporate the terms and provisions of the Letter Agreement into definitive
settlement documentation;
WHEREAS, the parties acknowledge that prior to the date hereof, the sum
of $100,000 has been paid to F&A to be credited towards payment of the
outstanding balance owed by Ferro to F&A (the "Prior Payment");
WHEREAS, Liberty, Xxxxx, XX, FF and F&A desire to settle, and resolve
the pending Action and any outstanding claims and disputes and other matters
related to the dealings among them, and to confirm the terms and provisions of
the Letter Agreement in this Agreement and the agreements attached hereto,
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Settlement.
Simultaneously upon the execution of this Agreement (the "Closing"):
1. Ferro shall execute and deliver a promissory note in the
principal amount of $1,063,123.09 (taking into account the
Prior Payment and the payment being made simultaneously
herewith under Section A.1. above) in favor of F&A (the
"Note"), in the form attached hereto as Exhibit C;
2. Liberty shall execute and deliver to F&A a Limited Guaranty,
in the form attached hereto as Exhibit D;
3. FG and FF, as principals of Ferro, shall each execute and
deliver to F&A, a Personal Guaranty of all payments due
under the Note, in the form attached hereto as Exhibit E.
Additionally, FG and FF shall pay to F&A upon the earlier to
occur of (i) the expiration of the term of the Note or, (ii)
the closing of the Real Estate Transactions (as defined in
Section C.1. below), the amount of $__________, representing
interest on the $1,717,310 at the rate of 9% per annum from
January 1, 2000 until the date hereof;
4. Ferro shall execute and deliver a Stock Pledge Agreement in
favor of F&A, securing the Note by a pledge of stock of
Liberty Group Holdings, Inc. ("Holdings"), in the form
attached hereto as Exhibit F;
5. F&A and Liberty shall execute and deliver a Label Repurchase
Agreement, in the form attached hereto as Exhibit G;
6. F&A will cause their counsel to execute and immediately file
a stipulation dismissing and withdrawing the Action with
prejudice, in the form attached hereto as Exhibit H.
2. Business Dealings.
1. During the four (4) week period commencing on the date
hereof, F&A shall be entitled to receive from Liberty, on a
weekly basis, a payment to be credited against the Note in
the amount of the greater of (i) $100,000 or (ii) the amount
owed for the actual order delivered and shipped by F&A
during each such week.
2. From and after the date hereof until May 1, 2000, F&A shall
supply Liberty for all orders placed by Liberty to F&A on a
30-day credit basis. From and after May 1, 2000, such credit
terms shall be reduced to a 21-day payment term.
3. Commencing on May 1, 2000 and continuing for all orders
placed until May 31, 2000, Liberty shall be entitled to
receive from F&A a $.02 per pound discount on all orders
placed with F&A other than with respect to orders for the
Xxx Xxxx label; provided, however, that if at the time of
placing the order, Liberty is not current in its payment
obligations to F&A, no discount will be available to
Liberty.
3. Available Proceeds; Collateral
1. Upon the financing of any Real Estate Transactions (as such
term is defined below), the available proceeds from any such
Transaction shall be used first to pay the creditors of
Ferro, including Liberty and F&A, pro ratably in proportion
to their respective debts, which shall not be less than 50%
of the proceeds to F&A. "Real Estate Transactions" shall
mean the re-financing of real properties owned by the
principals of Ferro and their affiliates and/or family
members ("Ferro Principals") in Brooklyn, New York and New
Jersey, after the second Medallion financing transaction.
2. Upon the financing and/or hypothecation of any transactions
with respect to the stock of Holdings which was paid to
Ferro as consideration for its assets, the available
proceeds shall be used to pay creditors of Ferro, including
Liberty and F&A, pro ratably in proportion to their
respective debts. 1.
3. F&A shall become a mortgagee on the real estate owned by the
Ferro Principals, including without limitation the Queens
and Brooklyn parcels, as set forth on Schedule 1 hereto. F&A
acknowledges that Liberty has a $1,000,000 unfiled credit
line mortgage which may be filed at anytime against said
real estate.
4. Confidentiality.
The parties acknowledge and agree that the terms of this
settlement and all documents relating thereto are confidential and
hereby covenant and agree that they, or any entity which they control,
shall not disclose, directly or indirectly, to any third party the
terms of this Agreement or any matter or information relating to or
concerning this Agreement and all discussions and information provided
in connection herewith and said matters and information shall be kept
strictly confidential, except as required by applicable law, rule or
regulation.
5. Representations and Warranties.
1. Each party hereto represents and warrants that (i) it has
the full power and authority to enter into this Agreement
and to execute and deliver all other documents in connection
herewith, and the execution, delivery and performance of
this Agreement and such other documents by such party will
not violate the certificate of incorporation, by-laws,
limited liability agreement or certificate of formation of
any such party or any other agreement affecting any such
party or any law, rule, order, ordinance or statute of any
governmental authority having jurisdiction over such party;
and (ii) the person signing below on behalf of such party
represents that he is an officer of such entity and that he
has been authorized to enter into this Agreement, and to
execute all documents in connection herewith, and to do such
other acts and things as may be necessary or appropriate for
and consistent with carrying out the intent and purposes of
this Agreement.
2. Liberty represents and warrants that during the term of the
Note, it will not sell, assign, transfer or otherwise
dispose of all or substantially all of its assets, other
than in the ordinary course of its business.
6. Further Assurances
Each of the parties hereto agree to do such other and
further acts and things, and to execute and deliver such instruments
and documents at any time after the date hereof as any party hereto
may reasonably request to effect the purposes and provisions of this
Agreement.
7. General
1. This Agreement may be executed in two or more counterparts,
each of which shall constitute on original, but all of which
when taken together shall constitute one and the same
instrument.
2. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York without regard
to conflict of law principles.
3. This Agreement shall be binding upon and inure to the
benefit of the parties, and their respective heirs,
successors, personal representatives, and assigns.
4. This Agreement and the Letter Agreement contains the entire
agreement between the parties hereto with respect to the
matters contemplated herein and supercedes all prior
agreements or understandings among the parties related to
the subject matter herein.
5. No change or modification of this Agreement shall be valid,
binding or enforceable as a party hereto unless the same
shall be in writing and signed by the parties hereto.
6. If any provision of this Agreement or the application
thereof to any party or circumstance shall be held invalid
or unenforceable to any extent, the remainder of this
Agreement and the application of such provisions to the
other parties or circumstances shall not be effected thereby
and shall be enforced to the greatest extent permitted by
applicable law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
FERRO FOODS CORPORATION
By: /s/______________________
Name: Xxxxx Xxxxx, Xx.,
Title: President
LIBERTY FOOD GROUP, LLC
By: LIBERTY GROUP HOLDINGS, INC.,
Managing Member
By: /s/______________________
Name: Xxxxx X. Xxxx,
Title: President
F&A DAIRY PRODUCTS, INC.
By: /s/______________________
Name:
Title:
/s/
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Xxxxx Xxxxx, Xx., Individually
/s/
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Xxxxx Xxxxxxx, Individually
INDIVIDUAL ACKNOWLEDGMENT
STATE OF )
) ss.:
COUNTY OF )
On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction aforesaid, personally appeared Xxxxx Xxxxx, Xx., personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within agreement and acknowledged to me that by
his signature on the agreement, the individual executed the instrument.
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Signature and Office of individual
taking acknowledgment
[SEAL]
INDIVIDUAL ACKNOWLEDGMENT
STATE OF )
) ss.:
COUNTY OF )
On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction aforesaid, personally appeared Xxxxx Xxxxxxx, personally known to
me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within agreement and acknowledged to me that by
his signature on the agreement, the individual executed the agreement.
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Signature and Office of individual
taking acknowledgment
[SEAL]
ACKNOWLEDGMENT
STATE OF )
: ss.:
COUNTY OF )
On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction aforesaid, personally appeared Xxxxx Xxxxx, Xx., personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within agreement and acknowledged to me that he
executed the same in his capacity, on behalf of Ferro Foods Corporation, a New
York corporation as the President thereof, and that by his signature on the
agreement, the person or entity upon behalf of which the individual acted,
executed the agreement.
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Signature and Office of individual
taking acknowledgment
[SEAL]
ACKNOWLEDGMENT
STATE OF )
: ss.:
COUNTY OF )
On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction aforesaid, personally appeared Xxxxx X. Xxxx, personally known to
me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within agreement and acknowledged to me that he
executed the same in his capacity, on behalf of Liberty Group Holdings, Inc., a
Delaware corporation, and the managing member of Liberty Food Group, LLC, a
Delaware limited liability company, as the President thereof, and that by his
signature on the agreement, the person or entity upon behalf of which the
individual acted, executed the agreement.
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Signature and Office of individual
taking acknowledgment
[SEAL]
ACKNOWLEDGMENT
STATE OF )
: ss.:
COUNTY OF )
On this day of March, 2000, before me, a Notary Public in and for the
jurisdiction aforesaid, personally appeared , personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within agreement and acknowledged to me that he executed the
same in his capacity, on behalf of F&A Dairy Products, Inc. as the
____________________ [fill in capacity in which signing] thereof, and that by
his signature on the agreement, the person or entity upon behalf of which the
individual acted, executed the agreement.
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Signature and Office of individual
taking acknowledgment
[SEAL]
