SETTLEMENT AGREEMENT
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THIS SETTLEMENT AGREEMENT (this "Agreement") is entered into as of
June 21, 1994 among JOHN GARAMENDI, as Insurance Commissioner of the State of
California, solely in his capacity as conservator, rehabilitator and liquidator
(the "Rehabilitator") of Executive Life Insurance Company ("ELIC"), and the BASE
ASSETS TRUST (the "Trust"), on the one hand, and CHECKER MOTORS CO., L.P., a
Delaware limited partnership (the "Partnership"), CHECKER MOTORS CORPORATION, a
New Jersey corporation and the general partner of the Partnership ("Motors"),
CHECKER HOLDING CORP. III, a Delaware corporation ("Holding"), and INTERNATIONAL
CONTROLS CORP., a Florida corporation ("ICC"; the Partnership, Motors, Holding
and ICC being hereinafter referred to as the "Checker Entities", jointly, and
"Checker Entity", separately), on the other hand.
RECITALS
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WHEREAS, by order of the Superior Court for the County of Los Angeles
County (the "Court") on April 11, 1991, the Rehabilitator was appointed
conservator of ELIC; and
WHEREAS, the Checker Entities and ELIC are parties to an Amended and
Restated Partnership Agreement dated the 5th day of March, 1986, as amended on
July 28, 1989 and purportedly on June 25, 1991 (the "Partnership Agreement");
and
WHEREAS, the Checker Entities have filed a claim with the Insurance
Commissioner in Michigan, as ancillary receiver of ELIC (the "Ancillary
Receiver"); and
WHEREAS, the Rehabilitator has filed a lawsuit against the Checker
Entities in the Court, in Case No. BS 006912 in which, among other things, the
Rehabilitator has challenged the enforceability of the purported June 25, 1991
amendment to the Partnership Agreement and the claim filed with the purported
Ancillary Receiver (the "Lawsuit"); and
WHEREAS, certain disputes have arisen as to the relative rights of
certain of the Checker Entities, on the one hand, and the Rehabilitator, ELIC
and the Trust, on the other hand, in the Partnership, certain of which disputes
are being litigated in the Court; and
WHEREAS, the Checker Entities, the Rehabilitator, ELIC and the Trust
desire to end the litigation and settle their disputes on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Checker Entities and the Rehabilitator and
the Trust hereby agree as follows:
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ARTICLE I
DEFINITIONS
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1.1 DEFINITIONS. Capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Partnership Agreement.
ARTICLE II
SALE OF INTERESTS
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2.1 INTERESTS TO BE SOLD. Subject to the terms and conditions of
this Agreement, at the closing of the transactions contemplated by this
Agreement (the "Closing"), the Rehabilitator and the Trust shall sell, assign,
transfer and deliver to Motors or another Checker Entity designated by Motors,
and Motors or such designee shall purchase from the Rehabilitator and the Trust,
the entire interest of the Rehabilitator, ELIC and the Trust in the Partnership
(including, without limitation, the Limited Partner's Capital Account, the
Excess Capital Account and their interest, if any, in the assets, the earnings
and the Profits of the Partnership, in each case past, present or future) (the
"Interest"), which shall be delivered by the Rehabilitator, ELIC and the Trust
free and clear of any liens, claims, charges or encumbrances of any nature
whatsoever, for a purchase price of $37,000,000 (the "Purchase Price").
2.2 CLOSING. The Closing will take place on the date (the "Closing
Date") immediately following, and, unless waived by the Checker Entities, is
expressly conditioned on, the
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closing of and receipt of the cash proceeds of (i) the sale by ICC of
$140,000,000 principal amount of its Senior Secured Notes due 2002 and of
125,000 Units, each Unit consisting of $1,000 of ICC's Senior Subordinated Notes
due 2004 and a warrant to purchase 4.25 shares of ICC's common stock (the
"Offerings") and (ii) the initial borrowing by ICC and its subsidiaries pursuant
to a loan agreement between ICC and NBD Bank, N.A., as Agent for certain lenders
(the "Borrowing"), providing for a term loan in the amount of $50,000,000 and a
revolving credit loan in the amount of $95,000,000. At the Closing:
(a) the Checker Entities shall deliver to the Trust the
Purchase Price by wire transfer of funds;
(b) the Rehabilitator and the Trust shall deliver to Motors an
Assignment of Partnership Interest (the "Assignment") in the form attached
hereto as Exhibit A;
(c) the Checker Entities and the Rehabilitator shall execute
the Stipulation of Dismissal (the "Stipulation") in the form attached hereto as
Exhibit B, which shall be filed promptly by the Rehabilitator;
(d) the Checker Entities shall execute and deliver to the
Rehabilitator the Withdrawal of Claim (the "Withdrawal of Claim") in the form
attached hereto as Exhibit C (which shall be filed by the Rehabilitator
immediately following the filing of the Stipulation) and, regardless of whether
such Withdrawal of Claim is filed, shall agree to take no further action to
pursue such claim; and
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(e) the Checker Entities, on the one hand, and the
Rehabilitator and the Trust, on the other hand, shall each execute and deliver
to the other a Release in the form attached hereto as Exhibit D or E, as
appropriate.
2.3 FURTHER COVENANTS AND ASSURANCES. (a) After the Closing, the
Rehabilitator, the Trust and the Checker Entities shall from time to time
execute and deliver such other instruments and documents and take such other
actions as each may reasonably request to evidence and consummate the
transactions contemplated by this Agreement.
(b) At any time after the Closing, Motors may transfer all of
the assets, business and operations of the Partnership, as substantially
constituted on the date of this Agreement and as those assets or proceeds of
those assets may be constituted following replacement, retirement or
substitution in the ordinary course of business ("Partnership Assets"), to
Motors and/or one or more corporations or partnerships entirely owned and
controlled by Motors and/or its wholly-owned subsidiaries ("Partnership
Successors"); provided that such corporation(s) or partnership(s) (i) (if other
than Motors) are established solely for the purpose of owning and operating the
Partnership Assets and carrying on the Partnership business, (ii) shall not,
until the expiration of five years from the Closing Date, acquire or carry on
any business or operations of a type not currently being carried on by the
Partnership, (iii) shall maintain books and records reasonably necessary or
appropriate to enable Motors to perform its obligations under this Paragraph
2.3, and (iv) (if
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other than Motors) shall assume all obligations of Motors hereunder.
(c) Until the expiration of five years from the Closing Date
(i) without the prior written consent of the Trust, neither any of the Checker
Entities, any Motors designee that acquires all or any portion of the Interest
under this Agreement, nor any Partnership Successor or other transferee of
Partnership Assets (other than transferees in the ordinary course of business)
shall enter into, become a party to, or become liable in respect of, any
contract, agreement or undertaking with any Affiliate except in the ordinary
course of business and on terms not less favorable to such person than those
which could be obtained if such contract, agreement or undertaking were an arm's
length transaction with a person other than an Affiliate. (The foregoing,
however, shall not apply to such contracts, agreements and undertakings set
forth in Schedule I hereto, which are in effect on the date of this Agreement);
and (ii) the Checker Entities shall, and any Partnership Successor shall be
required to covenant and agree to, operate the businesses of the Partnership in
good faith and exercising reasonable business judgment.
For purposes of this clause (c), the term "Affiliate" shall
mean (A) any person controlling, controlled by or under common control with any
other person, where "control" (including "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or other-
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wise; or (B) any person having beneficial ownership of 5% or more of any of the
Checker Entities, any Motors designee that acquires the Interest under this
Agreement, or any Partnership Successor.
(d) (i) If a Triggering Event (as defined below) occurs
within five years of the Closing Date, Motors, at its own cost, shall promptly
calculate, in accordance with the provisions of and as if the Partnership had
continued operating under the Partnership Agreement (the "Calculation"), the
capital accounts of Motors and ELIC (A) without giving effect to dispositions of
assets contemplated by Section 2.3(b) of this Agreement, (B) as if the
Partnership had continued in accordance with the Partnership Agreement and ELIC
had remained the sole participating Limited Partner in good standing as a
Limited Partner at all relevant times (without regard to any alleged defaults
with respect thereto) and Motors the sole General Partner from the date of
inception of the Partnership until the date of the Triggering Event and,
consistent therewith, by including any and all allocations of Net Income and Net
Loss that would have been allocated to ELIC as a Limited Partner, pursuant to
the Partnership Agreement, from the inception of the Partnership to the date of
the Triggering Event, which allocations shall be added to or subtracted from
ELIC's Capital Account, as appropriate and without duplication; (C) without
increasing or decreasing ELIC's Capital Account or any distributions as a result
of the addition or withdrawal of any Partners with respect to the Partnership;
and (D) without reduction of ELIC's Capital Account for the Purchase Price. The
Rehabilitator and the Trust shall
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then be entitled to a payment from the Checker Entities, each being jointly and
severally liable therefor, in addition to the payment of the Purchase Price
received on the Closing Date, equal to the positive difference between (x) the
amount of ELIC's Capital Account (as calculated under the terms of this
Agreement) on the date of the Triggering Event and (y) the future value of the
Purchase Price, calculated at 15% per annum from the Closing Date to the date of
the Triggering Event. All payments hereunder shall be made in cash only and
shall be payable to the Trust. If the consideration received by the Checker
Entities upon the consummation of a Triggering Event includes property or
securities other than cash, such property or securities shall be valued in good
faith by the board of directors of Motors at their fair market value for
purposes of determining the amount to which the Trust is entitled.
(ii) Motors or the Partnership Successor, as the case may
be, shall deliver the Calculation to the Rehabilitator and the Trust, together
with a report (the "Report") of the independent accountants of the Partnership
confirming that the Calculation complies with the provisions of the Partnership
Agreement as in effect on the date hereof, with such modification thereto as are
set forth in clause (i) above. In the event that the Rehabilitator or the Trust
notifies Motors in writing, within 30 days of its receipt of the Calculation and
the Report, that it does not agree with the Calculation, then the Rehabilitator
and/or the Trust may select an independent accountant to review the Calculation.
ICC and Motors agree to co-operate fully with
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the Trust's and the Rehabilitator's independent accountant by, among other
things, making available to such independent accountant all documents, including
books, records, financial statements and workpapers relating to the Triggering
Event, the Calculation, all assumptions used in making the Calculation and the
financial condition of the Partnership (or its successor) from the Closing Date
to the date of the Triggering Event. In the event that the Trust's and the Re-
habilitator's independent accountant's calculation of the amount due to ELIC
differs from the amount included in the Calculation by more than five percent
and the parties cannot resolve the difference within twenty-one days, then the
parties agree to resolve the dispute in the following manner. The respective
independent accountants for the Checker Entities and the Rehabilitator/Trust
shall appoint a mutually acceptable independent accountant ("Umpire"), who shall
have forty-five days to resolve the dispute, and whose decision shall be final,
binding and not appealable to any court or other forum. If the respective
independent accountants for the Checker Entities and Rehabilitator/Trust,
however, are unable to agree upon the selection of an Umpire, then the New York
office of the largest firm of independent auditors which does not provide
services to any of the parties to this Agreement shall serve as the Umpire. If
the Umpire is retained pursuant to this section, its cost shall be borne by the
party whose independent accountant was not within ten percent of the Umpire's
calculation. If both parties were within ten percent of the Umpire's calcu-
lation, then each side will bear half of the Umpire's costs. Nothing con-
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tained in the foregoing shall be deemed to prevent the Checker Entities from
consummating the Triggering Event, and the acceptance by the Trust of any
payment upon consummation of a Triggering Event shall not be deemed a waiver of
its right to challenge the Calculation in the manner set forth herein.
(e) A "Triggering Event" shall refer to any or all of the
following:
(i) at any time prior to the transfer of the Partnership
Assets from the Partnership to one or more Partnership Successors pursuant to
Section 2.3(b) hereof, upon (A) a sale or other transfer of all or substantially
all of the Partnership Assets, whether in a single sale or transfer or as a
result of more than one sale or transfer that results in the aggregate in the
sale or transfer of all or substantially all of the Partnership Assets, or (B)
any transfer by ICC of any immediate or mediate ownership of any Partner,
directly or indirectly, whether as a result of a change of ownership or control,
merger, consolidation, reorganization or other change of corporate form, sale of
all or substantially all of the assets of such Partner or any other disposition
with respect to such Partner, provided that a Triggering Event shall not occur
upon any such transfer under (B) above if such transfer would have been per-
mitted by Section 8.2 of the Partnership Agreement or otherwise under the
Partnership Agreement and if the transferee expressly agrees in writing to be
bound by the terms and conditions of this Agreement; or
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(ii) at any time upon or after the transfer of the
Partnership Assets from the Partnership to one or more Partnership Successors,
upon (A) a sale of all or substantially all of the Partnership Assets by any
Partnership Successor, any of the Checker Entities or any wholly-owned
subsidiary thereof, whether in a single sale or transfer or as a result of more
than one sale or transfer that results in the aggregate in a sale or transfer of
all or substantially all of the Partnership Assets; or (B) any transfer of the
immediate or mediate ownership of any Partnership Successor, any of the Checker
Entities or any wholly-owned subsidiary thereof, directly or indirectly, whether
as a result of a change of ownership or control, merger, consolidation,
reorganization or other change of corporate form, that removes from ICC's direct
or indirect ownership all or substantially all of the Partnership Assets.
Notwithstanding the foregoing, neither the sale to the public of the securities
of ICC, any Checker Entity, or any Partnership Successor nor the sale or other
transfer by any shareholder of ICC of shares of ICC stock shall constitute a
Triggering Event.
(f) If the Closing shall not have occurred on or before
September 30, 1994, then, after such date, the Rehabilitator and the Trust shall
have the right to sell the Interest or any part thereof to any person on such
terms and conditions as the Rehabilitator and the Trust may deem appropriate in
accordance with the provisions hereof. The Rehabilitator and the Trust shall
deliver written notice to Motors not less than forty-five days prior to the
closing of the
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proposed sale describing the terms and conditions thereof ("Notice of Third
Party Sale"). Motors shall have the right, by notifying the Rehabilitator and
the Trust in writing within fifteen days from the date of the Notice of Third
Party Sale, to purchase the Interest, or portion so offered, on the same terms
and conditions set forth in the Notice of Third Party Sale ("Election Notice"),
and shall thereby be contractually bound to purchase the Interest, or portion
thereof proposed to be sold, on those terms and conditions. If Motors does not
deliver the Election Notice to the Rehabilitator and the Trust or if Motors
otherwise fails to close the transactions under the Election Notice within
thirty days from the date of the Election Notice, notwithstanding anything in
this Agreement or in the Partnership Agreement to the contrary, the
Rehabilitator and the Trust shall have the right to dispose of the Interest, or
portion thereof proposed to be sold, substantially on the terms and conditions
set forth in the Notice of Third Party Sale. If for any reason any proposed
sale shall not be completed, this Agreement (including this Section) shall
continue to remain in full force and effect between the parties hereto.
(g) Notwithstanding any transfer of Partnership Assets or any
transfer of the assets, ownership or control of Motors, any Motors designee that
acquires the Interest under this Agreement, or any Partnership Successor, ICC
shall remain jointly and severally obligated under this Agreement with Motors,
any Motors designee that acquires the Interest under this Agreement,
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any Partnership Successor, or any of their respective successors or assigns.
(h) The Checker Entities agree that until the Closing Date
they shall continue to make quarterly payments in the same amount as have been
made since June 1991, which payments shall not reduce the Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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OF THE CHECKER ENTITIES
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Each of the Checker Entities hereby represents and warrants to the
Rehabilitator and the Trust as follows:
3.1 AUTHORITY. Such Checker Entity has the corporate or
partnership power and authority to execute and deliver this Agreement and
perform its obligations hereunder.
3.2 BINDING EFFECT. This Agreement has been duly and validly
authorized, executed and delivered by such Checker Entity and constitutes the
legal, valid and binding obligation of such Checker Entity, enforceable against
such Checker Entity in accordance with its terms. Neither the execution and
delivery of this Agreement by such Checker Entity, nor the consummation by it of
the transactions contemplated hereby, nor compliance by it with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of such entity's Certificate of Incorporation or Bylaws or the Partnership
Agreement, (ii) conflict with or result in the breach of any term, condition or
provision of, or constitute a default under, upon the giving of
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notice or the termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property or
assets of such Checker Entity pursuant to, or otherwise require the consent of
any Person under, any agreement or obligation to which such Checker Entity is a
party or by which any of its properties or assets may be bound, or (iii) violate
or conflict with (or require any filing, notification, report, approval or other
similar matter under) any laws applicable to such Checker Entity or any of its
properties or assets.
3.3 NO CONTRAVENTION OF OFFERINGS OR BORROWING. The execution,
delivery and performance by Motors of this Agreement shall not conflict with or
result in a default under, with the passage of time, the giving of notice, or
both, any material agreement, indenture, instrument or other document pertaining
to the Offerings, or the Borrowing to which any of the Checker Entities is a
party or by which any of their properties are bound.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
THE REHABILITATOR AND THE TRUST
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4.1 The Rehabilitator hereby represents and warrants to the
Checker Entities as follows:
4.1.1 AUTHORITY. The Rehabilitator has full power and
authority to execute and deliver this Agreement and perform his obligations
hereunder.
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4.1.2 BINDING EFFECT. This Agreement has been duly and
validly authorized by any and all parties whose authorization is required by the
laws of the State of California and by the Court, and has been duly executed and
delivered by the Rehabilitator and constitutes the legal, valid and binding
obligation of the Rehabilitator and ELIC enforceable against the Rehabilitator
and ELIC in accordance with its terms. Neither the execution and delivery of
this Agreement by the Rehabilitator, nor the consummation by the Rehabilitator
of the transactions contemplated hereby, nor compliance by the Rehabilitator
with any of the provisions hereof will (i) conflict with or result in the breach
of any term, condition or provision of, or constitute a default under, upon the
giving of notice or the lapse of time or otherwise, give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or assets of ELIC
pursuant to, or otherwise require the consent of any Person under, any agreement
or obligation to which the Rehabilitator or ELIC is a party or by which any of
ELIC's properties or assets may be bound, or (ii) violate or conflict with (or
require any filing, notification, report, approval (including, without limi-
tation, Court consent or approval) or other similar matter under) any laws
applicable to the Rehabilitator or ELIC or any of ELIC's properties or assets.
4.2 The Trust hereby represents and warrants to the Checker
Entities as follows:
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4.2.1 AUTHORITY. The Trust has full power and authority to
execute and deliver this Agreement and perform its obligations hereunder.
4.2.2 BINDING EFFECT. This Agreement has been duly and
validly authorized, executed and delivered by the Trust and constitutes the
legal, valid and binding obligation of the Trust enforceable against the Trust
in accordance with its terms. Neither the execution and delivery of this
Agreement by the Trust, nor the consummation by the Trust of the transactions
contemplated hereby, nor compliance by the Trust with any of the provisions
hereof will (i) conflict with or result in the breach of any term, condition or
provision of, or constitute a default under, upon the giving of notice or the
lapse of time or otherwise, give rise to any right of termination, cancellation
or acceleration with respect to, or result in the creation of any lien, charge
or encumbrance upon any property or assets of the Trust pursuant to, or
otherwise require the consent of any Person under, any agreement or obligation
to which the Trust is a party or by which any of the Trust's properties or
assets may be bound, or (ii) violate or conflict with (or require any filing,
notification, report, approval (including, without limitation, Court consent or
approval) or other similar matter under) any laws applicable to the Trust or any
of the Trust's properties or assets.
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ARTICLE V
CONDITIONS TO THE OBLIGATIONS
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OF THE CHECKER ENTITIES
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The obligation of the Checker Entities to consummate the transactions
contemplated by this Agreement is subject to the satisfaction or waiver on or
before the day of the Closing (the "Closing Date") of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Rehabilitator and the Trust contained herein shall be true and
accurate in all material respects at and as of the date when made and at and as
of the Closing Date as though such representations and warranties were made at
and as of such date.
5.2 PERFORMANCE. The Rehabilitator and the Trust shall have per-
formed and complied with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date.
5.3 CERTIFICATES. The Rehabilitator and the Trust shall have fur-
nished the Checker Entities with such certificates to evidence compliance with
the conditions set forth in this Article V as may be reasonably requested by the
Checker Entities.
5.4 OPINION OF COUNSEL. The Rehabilitator and the Trust shall have
furnished the Checker Entities with an opinion of counsel in form reasonably
acceptable to the Checker Entities covering the matters set forth on Exhibits F-
1 and F-2, respectively, annexed hereto.
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5.5 DELIVERIES COMPLETE. The Rehabilitator and the Trust shall
have delivered the Assignment and the Stipulation.
5.6 TRANSFER TAXES. The Rehabilitator and the Trust shall have
provided the Checker Entities with evidence satisfac-tory to them of the payment
of, or the non-liability of the Checker Entities for, any transfer, stamp or
other similar taxes payable in connection with the transfer of the Interest
pursuant to this Agreement.
5.7 CLOSING OF THE OFFERINGS. ICC shall have received the proceeds
of the Offering and the Borrowing.
5.8 RELEASE. The Rehabilitator and the Trust shall have executed
and delivered a Release in the form annexed hereto as Exhibit D.
If the Rehabilitator has transferred the Interest to the Trust prior to the
Closing Date, then the Checker Entities shall be deemed to have waived all of
the foregoing conditions (to the extent they apply to the Rehabilitator) except
for the delivery of the Stipulation and the Release.
ARTICLE VI
CONDITIONS TO THE REHABILITATOR'S
---------------------------------
AND THE TRUST'S OBLIGATIONS
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The obligation of the Rehabilitator and the Trust to consummate the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver on or before the Closing Date of each of the following conditions:
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6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Checker Entities contained herein shall be true and accurate
in all material respects at and as of the date when made and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date.
6.2 PERFORMANCE. The Checker Entities shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
6.3 CERTIFICATES. The Checker Entities shall have furnished the
Rehabilitator and the Trust with such certificates of its authorized
representative to evidence compliance with the conditions set forth in this
Article VI as may be reasonably requested by the Rehabilitator.
6.4 OPINION OF COUNSEL. The Checker Entities shall have furnished
the Rehabilitator and the Trust with an opinion of counsel in form reasonably
satisfactory to the Rehabilitator and the Trust covering the matters set forth
in Exhibit G annexed hereto.
6.5 DELIVERIES COMPLETE. The Checker Entities shall have delivered
the Purchase price, the Stipulation and the Withdrawal of Claim.
6.6 RELEASE. Each of the Checker Entities shall have delivered a
Release in the form annexed hereto as Exhibit E.
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If the Rehabilitator has transferred the Interest to the Trust prior to the
Closing Date, then the Rehabilitator shall be deemed to have waived all of the
foregoing conditions except those included in Sections 6.5 and 6.6.
ARTICLE VII
EFFECT OF FAILURE OF CONDI-
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TIONS TO OCCUR OR BE WAIVED
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If the Closing shall not have occurred within seven months of the
execution of this Agreement, then the Rehabilitator, ELIC and the Trust, on the
one hand, and/or the Checker Entities, on the other hand, shall be entitled to
terminate this Agreement by giving notice to the other ("Notice Party") so long
as the Notice Party has not caused through any act within its control the
Agreement not to close. Upon termination of this Agreement, (a) this Agreement
shall be null and void except for the provisions of Section 2.3(f) and this
Article VII; (b) the Interest, if not previously assigned to the Trust, shall be
assigned to the Trust and the Trust shall be admitted to the Partnership as a
Limited Partner and shall be treated as a non-defaulting Partner from the date
of the Partnership's formation through the date of its admission pursuant to
this Article VII and thereafter in accordance with the terms of the Partnership
Agreement as in effect on the date hereof, and, accordingly, the Capital Account
of the Limited Partner shall be restated to an amount equal to the Capital
Account the Limited Partner would have had if it had not been
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treated as a defaulting Partner for any period; PROVIDED, HOWEVER, that (i) the
Limited Partner's Capital Account shall be reduced (without duplication with
respect to the foregoing) for the principal component of the distributions by
the Partnership to the Limited Partner as a defaulting Partner and pursuant to
Section 2.3(h) of this Agreement; and (ii) the Limited Partner shall have no
right to distributions in excess of those received by it either as a Partner
(including as a defaulting Partner) or pursuant to the terms of this Agreement;
(c) the Stipulation and the Withdrawal of Claim shall be delivered and filed as
set forth in Paragraphs 2.2(c) and (d) and the Releases in the forms attached
hereto as Exhibits D and E shall be delivered; (d) the Trust and Motors shall
amend the Partnership Agreement, to be effective with respect to all
distributions after December 31, 1993, to provide that notwithstanding anything
in Section 4.5 thereof to the contrary, distributions to the General Partner may
reduce the General Partner's Capital Account below zero and the General Partner
shall not be required to repay any such excess distribution pursuant to Section
4.6; PROVIDED, HOWEVER, that the Checker Entities shall jointly and severally
guaranty the obligations of the General Partner pursuant to Section 2.1.3 of the
Partnership Agreement in an amount equal to the cash distributions to the
General Partner after December 31, 1993 pursuant to Section 4.4.6 of the
Partnership Agreement, PROVIDED THAT, for purposes of determining the amount
owed under the guaranty only, the positive balance in the General Partner's
Capital Account shall be increased, or the negative balance in
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the General Partner's Capital Account shall be reduced, by the difference
between the value of the Partnership's medallions on the date hereof (which,
based on the good faith determination of ICC, are valued at $38,000 per
medallion) and the value of such medallions (including all amounts received from
sales or other transfers of medallions after the date hereof) on the date the
Partnership is terminated.
ARTICLE VII
MISCELLANEOUS
-------------
8.1 WAIVERS AND AMENDMENTS. This Agreement may not be amended or
terminated except upon the written consent of all parties. By an instrument in
writing, a party may waive compliance by the other party with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform; PROVIDED, HOWEVER, that such waiver shall not operate as a
waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided
herein or by law or in equity. The waiver by any party of the time for
performance of any act or condition hereunder does not constitute a waiver of
the act or condition itself.
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8.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as such laws
are applied to agreements between California residents entered into and to be
performed entirely within California.
8.3 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Each party agrees that it
will not assign, sell, transfer, delegate, or otherwise dispose of, whether
voluntarily or involuntarily, or by operation of law, any right or obligation
under this Agreement except as specifically permitted hereunder. Any purported
assignment, transfer, or delegation in violation of this paragraph shall be null
and void. Subject to the foregoing limits on assignment and delegation, this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns.
8.4 ENTIRE AGREEMENT. The parties intend that the terms of this
Agreement (including the Exhibits hereto) shall be the final expression of their
agreement with respect to the subject matter hereof and may not be contradicted
by evidence of any prior contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of
their terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding involving this Agreement.
8.5 SEVERABILITY OF THIS AGREEMENT. If any provision of this
Agreement, or the application hereof to any person, place or circumstance, shall
be held by a court of competent
-23-
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Agreement was
executed or last amended.
8.6 GENDER; NUMBER. Whenever the context of this Agreement
requires, the masculine gender shall include the feminine or neuter, and the
singular number shall include the plural.
8.7 CAPTIONS. The section and other headings used in this
Agreement are for reference purposes only and shall not constitute a part hereof
or affect the meaning or interpretation of this Agreement.
8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.
8.9 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, each party shall pay all expenses incurred by it or
on its behalf in connection with the Agreement and the transactions contemplated
hereby.
8.10 NOTICES. Any notice or communication required or permitted
hereunder shall be sufficiently given if in writing and (i) delivered in person
or by overnight delivery or courier service, (ii) sent by facsimile, or (iii)
deposited in the United
-24-
States mail, by certified mail postage prepaid and return receipt requested
(provided that any notice given pursuant to clause (ii) is also confirmed by the
means described in clause (i) or (iii)), as follows:
To the Rehabilitator:
To the Trust:
To the Checker Entities: Checker Motors Corporation
2016 North Pitcher Street
Kalamazoo, Michigan 49007
Attn: David R. Markin
President
Tel. (616) 343-6121
Fax. (616) 343-1660
with a copy to: Hutton Ingram Yuzek Gainen
Carroll & Bertolotti
250 Park Avenue
New York, New York 10177
Attn: Paulette Kendler
Tel. (212) 907-9650
Fax. (212) 907-9682
Such notice or other communication shall be deemed given when so delivered
personally, or sent by facsimile transaction, or, if sent by overnight delivery
or courier service, the business day after being sent from within the United
States, or if mailed, four days after the date of deposit in the United States
mails.
-25-
8.11 RECOVERY OF COSTS AND ATTORNEYS' FEES.
(a) Except as provided in Paragraph 2.3(d)(ii), any disputes
arising out of or relating to this Agreement, any document or instrument
delivered pursuant to, in connection with, or simultaneously with this
Agreement, or any breach of this Agreement or any such document or instrument
shall be settled by arbitration to be held in Los Angeles, California, in
accordance with the rules then in effect of the American Arbitration Association
or any successor thereto. The arbitrator ("Arbitrator") shall be a party
mutually acceptable to the Checker Entities, the Rehabilitator and the Trust;
PROVIDED, HOWEVER, that if they cannot agree on an arbitrator, the Regional
Director of the American Arbitration Association shall choose the Arbitrator.
The Arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the Arbitrator shall be final, conclusive, and
binding on the parties to the arbitration. Judgment may be entered on the
Arbitrator's decision in any court having jurisdiction.
(b) Any prevailing party or parties described in Section
8.11(a) above shall be entitled to reasonable attorneys' fees and any other
costs incurred in enforcing, or on appeal from, a judgment entered with respect
to any arbitration described in Section 8.11(a), separately from and in addition
to any other amount included in such judgment. This Section 8.11 shall be
severable from the other provisions of this Agreement and shall survive and not
be merged into any such judgment.
-26-
8.12 THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
8.13 SECTION 1654 INTERPRETATION. This Agreement has been
negotiated at arm's length and between persons sophisticated and knowledgeable
in the matters dealt with in this Agreement. Each party has been represented by
experienced and knowledgeable legal counsel. Accordingly, any rule of law
(including California Civil Code Section 1654) or legal decision that would
require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the purpose of
the parties and this Agreement.
8.14 AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, either before or after the Closing, in
addition to any other right or remedy available to him, to an injunction granted
by the Arbitrator restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement, and in either case no bond
or other security shall be required in connection therewith, and the parties
hereby consent to this issuance of such injunction and to the ordering of
specific performance.
-27-
8.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-28-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CHECKER MOTORS CO., L.P.
By: Checker Motors Corporation
General Partner
By: /s/ David R. Markin
______________________________
Name: David R. Markin
Title: President
CHECKER MOTORS CORPORATION
By: /s/ David R. Markin
______________________________
Name: David R. Markin
Title: President
CHECKER HOLDING CORP. III
By: /s/ David R. Markin
______________________________
Name: David R. Markin
Title: President
INTERNATIONAL CONTROLS CORP.
By: /s/ David R. Markin
______________________________
Name: David R. Markin
Title: President
/s/ John Garamendi
___________________________________
JOHN GARAMENDI, in his capacity as
Rehabilitator, but not Individually
BASE ASSETS TRUST
By: /s/ John Garamendi
________________________________
Trustee John Garamendi
By: /s/ Thomas Arnold
________________________________
Trustee Thomas Arnold
By: /s/ Anthony Buonoguro
________________________________
Trustee Anthony Buonoguro
-29-
SCHEDULE I
AFFILIATE TRANSACTIONS
As of December 31, 1993, American Country Insurance Company holds $0.9
million principal amount of Enhance Financial Services Group Inc., 7% Notes due
December 1, 1996, of which company Mr. Markin and Mr. Tessler are directors.
Each of Messrs. Markin, Solomon, Tessler and Thomas provides
consulting services to Yellow Cab Company and each receives for such services
(commencing in January 1988) $10,000 per month. Messrs. Solomon, Tessler and
Thomas also provide consulting services (a) to Motors for which they each
receive monthly fees of $5,000 (commencing in January 1988) and (b) to Country
for which they each receive monthly fees of approximately $18,300. Mr. Markin
serves as a consultant to Chicago AutoWerks, a division of Checker L.P., for
which he receives monthly fees of approximately $1,200 (commencing in January
1988), and to Country, for which he receives monthly fees of approximately
$4,600.
Frances Tessler, the wife of Allan R. Tessler, is employed by Smith
Barney Shearson which executes trades for Country's investment portfolio. During
1993 and 1992, Mrs. Tessler received for her services approximately $78,000 and
$69,000, respectively, of the commissions paid to Smith Barney Shearson.
On September 24, 1992, American Country Financial Services Corp.
("AFSC"), a subsidiary of Country, purchased from The Mid City National Bank of
Chicago the promissory note dated July 30, 1992, made by King Cars, Inc. ("King
Cars") in the principal amount of $381,500 plus accrued interest in the amount
of $3,560. The note, which has been renewed several times, has a current
principal amount outstanding of $407,691 and matures in December 1994. King
Cars is owned by Messrs. Markin, Tessler, Solomon, Thomas and Feldman. King
Cars is a party to an agreement dated December 15, 1992, with Yellow Cab
pursuant to which Yellow Cab purchases from King Cars display frames for
installation in its taxicabs and King Cars furnishes Yellow Cab advertising copy
for insertion into the frames. King Cars receives such advertising copy as an
agent in Chicago for an unrelated company which is in the business of selling
and arranging for local and national advertising. Of the revenues generated
from such advertising, 30% will be retained by King Cars and the balance will be
delivered to Yellow Cab until such time as Yellow Cab has recovered costs
advanced by it for the installation of advertising frames in 500 of its taxicabs
(approximately $78,000). The terms to Yellow Cab are the same or more favorable
than those offered by King Cars to unrelated third parties.
I-1
Employment Agreements
Checker L.P., as the assignee of Motors, is party to an Amended and
Restated Employment Agreement dated as of November 1, 1985, as further amended,
with David R. Markin pursuant to which Mr. Markin is to serve as President,
Chief Executive Officer and Chief Operating Officer of Checker L.P. until April
30, 1996, subject to extension (the "Termination Date"), at a minimum salary of
$600,000 per annum, together with the payment of certain insurance premiums. The
beneficiaries of these insurance policies are designated by Mr. Markin. Mr.
Markin continues to be eligible to participate in profit sharing, pension or
other bonus plans of Checker L.P. Pursuant to the Amended and Restated
Employment Agreement, in the event of Mr. Markin's death, Checker L.P. shall pay
Mr. Markin's estate the compensation which would otherwise be payable to him for
the period ending on the last day of the month in which death occurs. In
addition, Checker L.P. shall pay to Mr. Markin's beneficiaries deferred
compensation from the date of his death through the Termination Date in an
annual amount equal to one-third of his base salary at the date of his death. In
the event of termination of the Amended and Restated Employment Agreement for
any reason other than cause, disability or death, Mr. Markin shall continue to
serve as a consultant to Checker L.P. for a period of five years, for which he
shall receive additional compensation in the amount of $50,000 per annum.
Checker L.P. has agreed to indemnify Mr. Markin from certain liabilities arising
out of his service to Checker L.P., except for liabilities resulting from his
gross negligence or willful misconduct.
Checker L.P. is party to an Amended and Restated Employment Agreement
dated as of June 1, 1992, with Jeffrey Feldman pursuant to which Mr. Feldman
serves as President of the vehicular operations segment until February 1, 1996
subject to extension (the "Termination Date"), at a minimum salary of $200,000
per annum, together with the payment of certain insurance premiums. The
beneficiaries of these insurance policies are designated by Mr. Feldman. Mr.
Feldman is eligible to participate in profit sharing, pension or other bonus
plans implemented by the vehicular operations segment. Pursuant to the Amended
and Restated Employment Agreement, in the event of Mr. Feldman's death, Checker
L.P. shall pay Mr. Feldman's estate the amount of compensation which would
otherwise be payable to him for the period ending on the last day of the month
in which death occurs. In addition, Checker L.P. shall pay to Mr. Feldman's
estate deferred compensation form the date of his death to the Termination Date
in an annual amount equal to one-third of his base salary at the date of his
death. In the event of the termination of the Amended and Restated Employment
for any reason other than cause, disability or death, Mr. Feldman shall continue
to serve as a consultant to Checker L.P. for a period of five years (if termi-
nated by Mr. Feldman) or seven years (if terminated by Checker L.P.), for which
he shall receive compensation in the amount of
I-2
$75,000 per annum. Checker L.P. has agreed to indemnify Mr. Feldman from
certain liabilities, except for those resulting from his gross negligence or
willful misconduct.
Jeffrey M. Feldman is the nephew of David R. Markin.
Motors has guaranteed certain of Checker Taxi Association's
obligations. The outstanding principal balance of these obligations was
approximately $0.7 million, as of December 31, 1993.
American Country Insurance Company holds mortgages on certain of
Checker L.P.'s property, securing loans in the amount of approximately $3
million.
I-3
EXHIBIT A
TRANSFER AND ASSIGNMENT
AGREEMENT, made as of the day of , 1994 by and among
JOHN GARAMENDI, as Insurance Commissioner of the State of California, solely in
his capacity as conservator, rehabilitator and liquidator of Executive Life
Insurance Company, and the BASE ASSETS TRUST (collectively, the "Assignor"), and
CHECKER MOTORS CORPORATION, a New Jersey corporation (the "Assignee")
W I T N E S S E T H:
WHEREAS, Executive Life Insurance Company ("ELIC") is an alleged
Defaulting Limited Partner of Checker Motors Co., L.P., a Delaware limited
partnership (the "Partnership"), pursuant to the Amended and Restated Agreement
of Limited Partnership of the Partnership, dated the 5th day of March, 1986, as
amended on July 28, 1989 and purportedly on June 25, 1991 (the "Partnership
Agreement"; all capitalized terms used herein are used with the meanings
ascribed to them in the Partnership Agreement unless specifically provided
otherwise herein); and
WHEREAS, the Assignor desires to transfer its and ELIC's entire
interest in the Partnership (including, without
A-1
limitation, the Capital Account, the Excess Capital Account, and any interest it
or ELIC may have in the assets, the earnings and the Profits of the Partnership,
in each case past, present or future, the "Interest") to the Assignee.
NOW, THEREFORE, the parties hereto hereby agree as follows:
In consideration of the payment to the Assignor of Ten Dollars
($10.00) and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Assignor hereby transfers and assigns to the
Assignee, as of the date hereof, all of its and ELIC's right, title and interest
in and to the Partnership, including the right to receive any distributions to
which the Assignor may be entitled under the terms of the Partnership Agreement
and a proportionate allocation of items of income, gain, deduction, loss and
credit, except as provided in Sections 2.3(d) and (e) of the Settlement
Agreement dated as of May __, 1994 among the Assignor and the Assignee,
International Controls Corp., Checker Motors Co., L.P. and Checker Holding Corp.
III. The Assignee hereby assumes all of the liabilities, if any, of the
Assignor pursuant to the Partnership Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
-----------------------------------
JOHN GARAMENDI, in his capacity as
Rehabilitator, but not individually
A-2
BASE ASSETS TRUST
By: ______________________________
Trustee:
By: ______________________________
Trustee:
By: ______________________________
Trustee:
CHECKER MOTORS CORPORATION
By: ____________________________
Name:
Title:
A-3
EXHIBIT B
STIPULATION OF DISMISSAL
[To Be Completed]
B-1
EXHIBIT C
WITHDRAWAL OF CLAIM
[To be in form satisfactory
to the Rehabilitator]
C-1
EXHIBIT D
RELEASE
THIS RELEASE (this "Release") is made ________, 1994, between JOHN
GARAMENDI, solely in his capacity as conservator, rehabilitator and liquidator
(the "Rehabilitator") of Executive Life Insurance Company, and the Base Asset
Trust (the "Trust"), on the one hand, and each of CHECKER MOTORS CO., L.P., a
Delaware limited partnership (the "Partnership"), CHECKER MOTORS CORPORATION, a
New Jersey corporation and the general partner of the Partnership ("Motors"),
CHECKER HOLDING CORP. III, a Delaware corporation, and INTERNATIONAL CONTROLS
CORP. ("ICC"; the Partnership, Motors, Holding and ICC being hereinafter
referred to as the "Checker Entities"), on the other hand.
RECITALS
A. The Settlement Agreement, dated as of __________, 1994, among the
Checker Entities and the Rehabilitator and the Trust (the "Settlement
Agreement"; all capitalized terms not defined herein being used with the
meanings ascribed thereto in the Settlement Agreement) provides, among other
things, for the purchase by the Motors or its designee of the Interest.
B. This Release is being delivered by the Rehabilitator
simultaneously with the payment by the Checker Entities directly to the Trust of
the Purchase Price.
Accordingly, the parties hereto agree as follows:
1. RELEASE OF RELEASED PARTIES BY REHABILITATOR AND TRUST. In con-
sideration of receipt of the Interest, the
D-1
Rehabilitator and the Trust hereby release and forever discharge each of the
Checker Entities and each of their partners, officers, directors, shareholders
and employees, their advisors, attorneys, agents, predecessors in interest,
assignors, successors and assigns, and the partners, officers, directors,
shareholders and employees of each of the foregoing (all such released parties
hereinafter are collectively referred to as the "Released Parties") of and from
(i) any and all liabilities and obligations under the Partnership Agreement,
including, without limitation, any liability for any breach of a representation,
warranty or covenant contained in the Partnership Agreement, and (ii) any and
all claims and causes of action of any and every character, known or unknown,
anticipated or unanticipated, contingent or matured, which the Rehabilitator or
the Trust may have or claim to have against any of the Released Parties, arising
from or related to the Partnership Agreement and the management of the
Partnership (including but not limited to any claims that were raised or could
have been raised in the Lawsuit); provided, however, that no claims, rights or
obligations arising under the Settlement Agreement are released hereby.
2. FULL AND COMPLETE RELEASE; ALL CLAIMS COVERED. This Release is
intended to be and is a full and complete release by the Rehabilitator and the
Trust of the Released Parties regarding the subject matter of the release set
forth in Paragraph 1 hereof and is intended by the Rehabilitator and the Trust
to cover all claims of all types, whether arising under common law or under the
statutes or regulations of (a) the States
D-2
of California, New York, Delaware, Michigan, or any county, city or government
agency thereof, or (b) other states or similar jurisdictions of the United
States, or any county, city or government agency thereof; provided, however,
that no claims, rights or obligations arising under the Settlement agreement are
released hereby. The Rehabilitator and the Trust acknowledge and agree that
this Release is to be construed as the broadest possible type of release
regarding the subject matter of the release set forth in Paragraph 1 hereof,
releasing any and all claims, including, without limitation, antitrust,
contract, copyright, fiduciary duty, fraud, regulatory, royalty, securities,
usury, statutory, tort, trespass and any other claims.
3. COVENANT NOT TO SUE. In consideration for the transactions
contemplated by the Settlement Agreement, the Rehabilitator and the Trust, to
the extent that they held, hold or may hold any claims or causes of action that
are being released hereunder pursuant to this Release, hereby covenant with each
of the Released Parties not to sue, assert any claim against, or otherwise seek
any recovery from the Released Parties, whether for contract, fraud, tort or
otherwise.
4. AUTHORITY AND LEGAL COMPETENCE OF REHABILITATOR AND TRUST AND
LACK OF ASSIGNMENT OF CLAIMS. As part of the consideration for the transactions
contemplated by the Settlement Agreement, each of the Rehabilitator and the
Trust expressly severally represents and warrants to the Released Parties that
they are respectively legally competent and have the authority to give this
Release and that no assignment, pledge, sale, transfer,
D-3
or other disposition of any right, title, interest, in or to any claim against
the Released Parties has been made.
5. KNOWLEDGE AND UNDERSTANDING. EACH OF THE REHABILITATOR AND THE
TRUST SEVERALLY REPRESENTS AND AGREES THAT IT HAS CAREFULLY READ AND FULLY
UNDERSTANDS ALL OF THE PROVISIONS OF THIS RELEASE, THAT IT IS REPRESENTED HEREIN
BY COUNSEL OF ITS CHOICE AND HAS FULLY DISCUSSED THIS RELEASE WITH SUCH COUNSEL,
AND THAT IT IS ENTERING INTO THIS RELEASE VOLUNTARILY, WHOLLY UPON ITS OWN
VOLITION, JUDGMENT, BELIEF AND KNOWLEDGE, AND WITHOUT ANY DURESS OR UNDUE
INFLUENCE ON THE PART OF OR ON BEHALF OF ANY PARTY.
6. WAIVER OF CALIFORNIA CIVIL CODE S. 1542. THE REHABILITATOR AND
THE TRUST HEREBY WAIVE AS AGAINST EACH RELEASED PARTY ALL RIGHTS UNDER
CALIFORNIA CIVIL CODE S. 1542 AS TO THE SUBJECT MATTER OF THE RELEASE SET FORTH
IN PARAGRAPH 1 HEREOF, WHICH PROVIDES THAT:
"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."
THE REHABILITATOR AND THE TRUST ACKNOWLEDGE THAT THE HAVE BEEN FULLY INFORMED BY
THEIR COUNSEL CONCERNING THE EFFECT AND IMPORT OF THIS WAIVER OF RIGHTS UNDER
CALIFORNIA CIVIL CODE S. 1542.
7. RESERVATION OF RIGHTS. Notwithstanding anything to the contrary
in the Settlement Agreement or this Release, nothing therein or herein shall be
construed to waive or otherwise affect the rights of the Rehabilitator, ELIC,
and the Trust, if any, to proceed and/or recover against any person or
D-4
entity relating to any matter not the subject of the terms of paragraph 1 of
this Release, including, but not limited to, transactions or claims involving or
against South Charleston Stamping & Manufacturing Company.
8. MODIFICATIONS, AMENDMENTS OR WAIVERS. Provisions of this Release
may be modified, amended or waived only by a written document specifically
identifying this Release and signed by each Checker Entity and the Rehabilitator
and the Trust.
9. SUCCESSORS AND ASSIGNS. This Release shall be binding on, and
shall inure to the benefit of, the Rehabilitator and the Trust and the Released
Parties, respectively, and their respective legal representatives, successors,
heirs and assigns.
10. GOVERNING LAW. This Release shall be governed by, and construed
in accordance with, the internal laws of the State of California without taking
into account provisions regarding choice of law.
11. SEVERABILITY. If any provision of this Release, or the
application hereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Release and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Release was executed or last amended.
D-5
12. ENTIRE AGREEMENT. This Release, the Settlement Agreement and the
exhibits thereto contains the entire agreement and understanding of the parties
hereto concerning the subject matter hereof, and supersedes and replaces any
prior negotiations, understandings and agreements of any kind, written or oral.
Each of the Rehabilitator and the Trust acknowledges that no other party, nor
any agent or attorney of any other party, has made any promise, representation
or warranty whatsoever, express or implied, not contained herein, concerning the
subject matter hereof, to induce such party to execute this Release, and
acknowledges that it has not executed this Release in reliance upon any such
promise, representation or warranty not contained herein.
13. COUNTERPARTS. This Release may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Release to be
executed on the date first written above.
---------------------------------
JOHN GARAMENDI, in his capacity
as Rehabilitator, but not
individually
BASE ASSETS TRUST
By:_____________________________
Trustee
By:_____________________________
Trustee
By:_____________________________
Trustee
D-6
ACCEPTED:
CHECKER MOTORS CO., L.P.
By: Checker Motors Corporation
General Partner
By:______________________________
Name:
Title:
CHECKER MOTORS CORPORATION
By:______________________________
Name:
Title:
CHECKER HOLDING CORP. III
By:______________________________
Name:
Title:
INTERNATIONAL CONTROLS CORP.
By:______________________________
Name:
Title:
D-7
EXHIBIT E
RELEASE
THIS GENERAL RELEASE (this "Release") is made ________, 1994, between
each of INTERNATIONAL CONTROLS CORP., a Florida corporation ("ICC") CHECKER
MOTORS CO., L.P., a Delaware limited partnership (the "Partnership"), CHECKER
MOTORS CORPORATION, a New Jersey corporation and the general partner of the
Partnership ("Motors"), and CHECKER HOLDING CORP. III, a Delaware corporation
("Holding"); ICC, the Partnership, Motors and Holding being hereinafter referred
to as the "Checker Entities"), on the one hand, and JOHN GARAMENDI, solely in
his capacity as conservator, rehabilitator and liquidator (the "Rehabilitator")
of Executive Life Insurance Company, and the BASE ASSETS TRUST (the "Trust"), on
the other hand.
RECITALS
A. The Settlement Agreement dated as of __________, 1994, among
the Checker Entities and the Rehabilitator and the Trust (the "Settlement
Agreement"; all capitalized terms not defined herein being used with the
meanings ascribed thereto in the Settlement Agreement) provides, among other
things, for the purchase by the Checker Entities of the Interest.
B. This General Release is being delivered by the Checker Entities
simultaneously with the assignment of the Interest by the Rehabilitator and the
Trust to the Checker Entities.
E-1
Accordingly, the parties hereto agree as follows:
1. RELEASE OF RELEASED PARTIES BY THE CHECKER ENTITIES. In con-
sideration of receipt of the Interest, each of the Checker Entities hereby
releases and forever discharges the Rehabilitator and the Trust each of their
trustees, advisors, attorneys, agents, predecessors in interest, assignors,
successors and assigns, and the officers, directors, shareholders and employees
of each of the foregoing (all such released parties hereinafter are collectively
referred to as the "Released Parties") of and from (i) any and all liabilities
and obligations under the Partnership Agreement, including, without limitation,
any liability for any breach of a representation, warranty or covenant contained
in the Partnership Agreement, and (ii) any and all claims and causes of action
of any and every character, known or unknown, anticipated or unanticipated,
contingent or matured, which any of the Checker Entities may have or claim to
have against any of the Released Parties, arising from or related to the Part-
nership Agreement and the management of the Partnership (including but not
limited to any claims that were raised or could have been raised in the
Lawsuit); provided, however, that no claims, rights or obligations arising under
the Settlement Agreement are released hereby.
2. FULL, COMPLETE AND RELEASE; ALL CLAIMS COVERED. This Release
is intended to be and is a full and complete release by the Checker Entities of
the Released Parties regarding the subject matter of the release set forth in
Paragraph 1 hereof and is intended by the Checker Entities to cover all claims
of all
E-2
types, whether arising under common law or under the statutes or regulations of
(a) the States of California, New York, Delaware, Michigan, or any county, city
or government agency thereof, or (b) other states or similar jurisdictions of
the United States, or any county, city or government agency thereof; provided,
however, that no claims, rights or obligations arising under the Settlement
Agreement are released hereby. The Checker Entities acknowledge and agree that
this Release is to be construed as the broadest possible type of release
regarding the subject matter of the release set forth in Paragraph 1 hereof
releasing any and all claims, including, without limitation, antitrust,
contract, copyright, fiduciary duty, fraud, regulatory, royalty, securities,
usury, statutory, tort, trespass and any other claims.
3. COVENANT NOT TO Sue. In consideration for the transactions
contemplated by the Settlement Agreement, the Checker Entities, to the extent
that any of the Checker Entities held, holds or may hold any claims or causes of
action that are being released hereunder pursuant to this Release, hereby
covenant with each of the Released Parties not to sue, assert any claim against,
or otherwise seek any recovery from the Released Parties, whether for contract,
fraud, tort or otherwise.
4. AUTHORITY OF CHECKER ENTITIES AND LACK OF ASSIGNMENT OF CLAIMS.
As part of the consideration for the transactions contemplated by the Settlement
Agreement, each of the Checker Entities expressly represents and warrants to the
Released Parties that such Checker Entity has the authority to give this Release
and that no assignment, pledge, sale, transfer,
E-3
or other disposition of any right, title, interest, in or to any claim of such
Checker Entity against the Released Parties has been made.
5. KNOWLEDGE AND UNDERSTANDING. EACH CHECKER ENTITY REPRESENTS
AND AGREES THAT SUCH CHECKER ENTITY HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL
OF THE PROVISIONS OF THIS RELEASE, THAT SUCH CHECKER ENTITY IS REPRESENTED
HEREIN BY COUNSEL OF SUCH CHECKER ENTITY'S CHOICE AND HAS FULLY DISCUSSED THIS
RELEASE WITH SUCH COUNSEL, AND THAT SUCH CHECKER ENTITY IS ENTERING INTO THIS
RELEASE VOLUNTARILY, WHOLLY UPON SUCH CHECKER ENTITY'S OWN VOLITION, JUDGMENT,
BELIEF AND KNOWLEDGE, AND WITHOUT ANY DURESS OR UNDUE INFLUENCE ON THE PART OF
OR ON BEHALF OF ANY PARTY.
6. WAIVER OF CALIFORNIA CIVIL CODE S. 1542. EACH CHECKER ENTITY
HEREBY WAIVES AS AGAINST EACH RELEASED PARTY ALL RIGHTS UNDER CALIFORNIA CIVIL
CODE S. 1542 AS TO THE SUBJECT MATTER OF THE RELEASE SET FORTH IN PARAGRAPH 1
HEREOF, WHICH PROVIDES THAT:
"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."
EACH CHECKER ENTITY ACKNOWLEDGES THAT SUCH CHECKER ENTITY HAS BEEN FULLY IN-
FORMED BY SUCH CHECKER ENTITY'S OWN COUNSEL CONCERNING THE EFFECT AND IMPORT OF
THIS WAIVER OF RIGHTS UNDER CALIFORNIA CIVIL CODE S. 1542.
E-4
7. RESERVATION OF RIGHTS.
Notwithstanding anything to the contrary in the Settlement Agreement
or this Release, nothing therein or herein shall be construed to waive or
otherwise affect the rights of the Checker Entities, if any, to proceed and/or
recover against any person or entity relating to any matter not the subject to
the terms of paragraph 1 of this Release, including, but not limited to
transactions involving South Charleston Stamping & Manufacturing Company.
8. MODIFICATIONS, AMENDMENTS OR WAIVERS. Provisions of this
Release may be modified, amended or waived only by a written document
specifically identifying this Release and signed by each Checker Entity, the
Rehabilitator and the Trust.
9. SUCCESSORS AND ASSIGNS. This Release shall be binding on, and
shall inure to the benefit of, the Checker Entities and the Released Parties,
respectively, and their respective legal representatives, successors, heirs and
assigns.
10. GOVERNING LAW. This Release shall be governed by, and
construed in accordance with, the internal laws of the State of California
without taking into account provisions regarding choice of law.
11. SEVERABILITY. If any provision of this Release, or the
application hereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Release and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect only if, after
excluding
E-5
the portion deemed to be unenforceable, the remaining terms shall provide for
the consummation of the transactions contemplated hereby in substantially the
same manner as originally set forth at the later of the date this Release was
executed or last amended.
12. ENTIRE AGREEMENT. This Release and the Settlement Agreement
and related documents contains the entire agreement and understanding of the
parties hereto concerning the subject matter hereof, and supersedes and replaces
any prior negotiations, understandings and agreements of any kind, written or
oral. Each Checker Entity acknowledges that no other party, nor any agent or
attorney of any other party, has made any promise, representation or warranty
whatsoever, express or implied, not contained herein, concerning the subject
matter hereof, to induce such party to execute this Release, and acknowledges
that such Checker Entity has not executed this Release in reliance upon any such
promise, representation or warranty not contained herein.
13. COUNTERPARTS. This Release may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
E-6
IN WITNESS WHEREOF, the parties hereto have caused this Release to be
executed on the date first written above.
___________________________________
JOHN GARAMENDI, in his capacity as
Rehabilitator, but not individually
BASE ASSETS TRUST
By:_______________________________
Trustee
By:_______________________________
Trustee
By:_______________________________
Trustee
CHECKER MOTORS CO., L.P.
By: Checker Motors Corporation
General Partner
By:______________________________
Name:
Title:
CHECKER MOTORS CORPORATION
By:______________________________
Name:
Title:
CHECKER HOLDING CORP. III
By:______________________________
Name:
Title:
INTERNATIONAL CONTROLS CORP.
By:______________________________
Name:
Title:
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EXHIBIT F-1
OPINION OF COUNSEL TO THE
REHABILITATOR
14. The Rehabilitator has all requisite power and authority to execute, deliver
and perform his obligations under the Agreement (defined to include
Exhibits).
15. The execution, delivery and performance of the Agreement and the compliance
by the Rehabilitator with all of the provisions thereof and the
consummation of the transactions contemplated thereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body or, if so required,
all such consents, approvals, authorizations and orders have been obtained
and are in full force and effect, and will not conflict with or constitute
a breach of any of the terms or provisions of, or a default under, any
material agreement to which the Rehabilitator is a party or by which any of
ELIC's properties is bound or violate or conflict with any law,
administrative regulation or ruling or court decree applicable to the
Rehabilitator or ELIC or any of ELIC's properties.
16. The Agreement has been duly authorized, executed and delivered by the
Rehabilitator and constitutes the legal, valid and binding obligation of
the Rehabilitator, enforceable against the Rehabilitator and ELIC in
accordance with its terms, except (a) as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (b) that the availability of equitable remedies may be
limited by equitable principles of general applicability. To the best of
such counsel's knowledge, there are no legal or governmental proceedings
which question the power and authority of the Rehabilitator to deliver and
perform their obligations under the Agreement.
17. To the best knowledge of such counsel, there are no security interests,
charges, claims, liens, encumbrances or adverse interests of any kind on
the Interest and no actions, warrants or other rights to purchase,
agreement or other obligations to sell any portion of the Interest or any
portion of a claim against the Checker Entities are outstanding.
F-1-1
EXHIBIT F-2
OPINION OF COUNSEL TO THE
TRUST
1. The Trust has all requisite power and authority to execute, deliver and
perform its obligations under the Agreement (defined to include Exhibits).
2. The execution, delivery and performance of the Agreement and the compliance
by the Trust with all of the provisions thereof and the consummation of the
transactions contemplated thereby will not require any consent, approval,
authorization or other order of any court or governmental body or, if so
required, all such consents, approvals, authorizations and orders have been
obtained and are in full force and effect, and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, any material agreement to which the Trust is a party or by which any
of the Trust's properties is bound.
3. The Agreement has been duly authorized, executed and delivered by the Trust
and constitutes the legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, except (a) as
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (b) that the
availability of equitable remedies may be limited by equitable principles
of general applicability. To the best of such counsel's knowledge, there
are no legal or governmental proceedings which question the power and au-
thority of the Trust to deliver and perform its obligations under the
Agreement.
4. To the best knowledge of such counsel, there are no security interests,
charges, claims, liens, encumbrances or adverse interests of any kind on
the Interest and no actions, warrants or other rights to purchase,
agreement or other obligations to sell any portion of the Interest or any
portion of a claim against the Checker Entities are outstanding.
F-2-1
EXHIBIT G
OPINION OF COUNSEL TO THE CHECKER ENTITIES
1. Each of the Checker Entities has all requisite power and authority to
execute, deliver and perform his obligations under the Agreement (defined
to include Exhibits).
2. The execution, delivery and performance of the Agreement and the compliance
by the Checker Entities with all of the provisions thereof and the
consummation of the transactions contemplated thereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body or, if so required,
all such consents, approvals, authorizations and orders have been obtained
and are in full force and effect and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, any
material agreement to which any of the Checker Entities is a party or by
which any of any of their properties is bound or violate or conflict with
any law, administrative regulation or ruling or court decree applicable to
the Checker Entities or any of their properties.
3. The Agreement has been duly authorized, executed and delivered by each of
the Checker Entities and constitutes the legal, valid and binding
obligation of the Checker Entities, enforceable against the Checker
Entities in accordance with its terms, except (a) as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) that the availability of equitable
remedies may be limited by equitable principles of general applicability.
To the best of counsel's knowledge, there are no legal or governmental
proceedings which question the power and authority of the Checker Entities
to deliver and perform their obligations under the Agreement.
G-1