Exhibit 10-3
Settlement Agreement for Messrs. Young
THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
X.X. XXXXX AND )( CIVIL ACTION NO.
XXXX XXXXX )( C-95-506
)(
VS. )(
)(
QUANTUM LEARNING SYSTEMS, INC. )( JURY
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GENERAL RELEASE AND COMPROMISE SETTLEMENT AGREEMENT
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STATE OF TEXAS )
)
COUNTY OF NUECES )
This General Release and Compromise Settlement Agreement (the "Agreement")
is entered into effective March 25, 1996 (the "Effective Date") by and between
X.X. Xxxxx and Xxxx Xxxxx ("the Xxxxxx"), X.X. Xxxxx Construction Company
("Construction"), and Quantum Learning Systems, Inc., and its agents or assigns
("QLS").
W I T N E S S E T H :
WHEREAS, the Xxxxxx instituted the above-styled and numbered cause
("the Lawsuit") against QLS; and
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WHEREAS, bona fide disputes and controversies exist between the
parties, both as to liability and the amount of liability, if any, and by reason
of such disputes and controversies, the parties to this Agreement desire to
compromise and settle all claims and causes of action of any kind whatsoever,
whether now known or unknown, asserted or unasserted, which either now has or
may have against the other or others, their agents, employees, employers,
including without limitation, directors, officers, representatives, successors,
assigns and legal representatives, relating to or arising from (i) the matters
and claims that form the basis of the Lawsuit, and (ii) the execution, negotia-
tion or performance of the Purchase Agreement dated effective June 30, 1994
("Purchase Agreement"), the execution of any promissory note(s) pursuant to the
Purchase Agreement, and the subsequent sale or disposition of assets by the
Xxxxxx pursuant to or in connection with the Purchase Agreement. The parties
intend that the full terms and conditions of the release and settlement be set
forth in this Agreement;
NOW, THEREFORE, for the consideration expressed, the receipt and
sufficiency of which is expressly acknowledged, the parties agree as follows:
1. Subject to the consummation of financing described in paragraph
3(a) below and the exchange of other consideration contemplated by this Agree-
ment (except for future consideration arising from disposition of proceeds from
the Xxxxxxxxxxx Lawsuit payable as described in paragraph 5 below), the Xxxxxx
agree to dismiss the Lawsuit with prejudice; and all costs of court incurred in
the Lawsuit shall be borne by the party incurring the costs;
2. The Xxxxxx, Construction and QLS, each of their agents, assigns,
employees, partners, and representatives, acknowledge and agree that the terms
and conditions of this settlement shall remain confidential, except as may be
required to comply with securities
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disclosure laws. The Xxxxxx, Construction and QLS agree that no term or
condition relating to this settlement or Agreement shall be disclosed to
anyone except to the parties' accountants, bookkeepers, and/or Board of
Directors, but then, only to the extent necessary to conduct any business
related to tax treatment of the settlement amounts. The Xxxxxx, Construction
and QLS shall inform their accountants, bookkeepers, and/or Board of
Directors that the settlement information divulged is subject to a
confidentiality agreement for which the Xxxxxx, Construction and QLS shall
be responsible. The parties to this Agreement agree that all communications
that led, directly or indirectly, to this settlement and that occurred at or
after the beginning of the mediation of this matter are and will remain
confidential. Moreover, the parties agree to treat this document as
confidential and non-discoverable.
3. The Xxxxxx agree to:
(a) pay to QLS, or to its agents or designees, the sum of Eight
Hundred Thousand and No/100 Dollars ($800,000.00) in cash
after the Xxxxxx obtain financing in that amount, but in no
event later than ninety (90) days after the Effective Date
of this Agreement;
The Xxxxxx agree to use their best efforts to obtain the
required financing within the time period specified and
obtaining financing to make payment to QLS shall be a
condition subsequent to the effectiveness of this Agreement;
provided, however, that should the Xxxxxx, despite their
best efforts, fail to obtain financing, this Agreement shall
be null and void and the Xxxxxx and QLS shall be restored to
their current status and position with respect to the
Lawsuit; and
(b) concurrent with the $800,000.00 payment described in
paragraph 3(a) above, endorse and deliver to QLS, or to the
extent QLS requires for its accounting purposes, a qualified
third person designated by QLS, stock certificates
representing ownership of 460,000 shares of Common Stock of
Quantum Learning Systems, Inc. (which stock certificates are
deemed to be valued at $1.00 per share for purposes of this
Agreement).
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4. Concurrent with the $800,000.00 payment described in paragraph
3(a) above, QLS agrees to:
(a) assign to the Xxxxxx any and all of its rights to remaining
payments on the original $1.8 million obligation referenced
in paragraph 2 of the Purchase Agreement; and
(b) assign and release to the Xxxxxx all collateral securing the
original $1.8 million obligation referenced in paragraph 2
of the Purchase Agreement (except for the 460,000 shares of
Common Stock of Quantum Learning Systems, Inc. being
transferred to QLS as described in paragraph 3(b) above).
5. The Xxxxxx, Construction and QLS agree to the following division
of proceeds, if any, that may be received by them from the lawsuit currently
pending in the 347th Judicial District Court of Nueces County, Texas, entitled
CCR, INC., X.X. XXXXX CONSTRUCTION COMPANY, X.X. XXXXX AND XXXX XXXXX VS. C.
XXXXX XXXXXX, XXXXXXXXXXX XXXXXXXX WHITE XXXXXXX & XXXXXXXX, ET AL., Cause No.
93-3809-H (the "Xxxxxxxxxxx Lawsuit"), in the following order of priority:
(a) proceeds from the Xxxxxxxxxxx Lawsuit shall be first applied
to satisfy any costs and expenses incurred by the parties'
attorneys in the Xxxxxxxxxxx Lawsuit and to reimburse the
Xxxxxx, in full, for all costs or expenses previously
advanced by them as of the date of resolution of the
Xxxxxxxxxxx Lawsuit (for reference, the amount of such costs
and expenses advanced by the Xxxxxx as of the date hereof is
approximately $154,015.00);
(b) second, proceeds from the Xxxxxxxxxxx Lawsuit shall be
applied to satisfy the attorneys' fees for which the parties
have contracted in the Xxxxxxxxxxx Lawsuit and to reimburse
the Xxxxxx, in full, for all attorneys' fees previously
advanced by them as of the date of resolution of the
Xxxxxxxxxxx Lawsuit (for reference, the amount of such
attorneys' fees advanced by the Xxxxxx as of the date hereof
is approximately $91,111.00);
(c) third, up to the next $600,000.00 in proceeds from the
Xxxxxxxxxxx Lawsuit shall be divided equally between the
Xxxxxx and QLS on a dollar-for-dollar basis, up to a maximum
amount of $300,000.00 to QLS as an additional contingent
payment on the assignment
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from QLS to the Xxxxxx described in paragraph 4(a) above,
and $300,000.00 to the Xxxxxx;
(d) fourth, up to the next $1.26 million in proceeds from the
Xxxxxxxxxxx Lawsuit shall be paid to the Xxxxxx as payment
on the assignment from QLS to the Xxxxxx described in
paragraph 4(a) above;
(e) thereafter, the remaining proceeds from the Xxxxxxxxxxx
Lawsuit, if any, shall be divided equally between the Xxxxxx
and QLS.
6. The payments and settlement terms set out in Paragraphs 3, 4, and
5 above are made without admission of any liability by the Xxxxxx, Construction
or QLS, their employees, officers, directors, agents, representatives,
successors, assigns, or legal representatives;
7. Subject to the consummation of financing described in paragraph
3(a) above and the exchange of other consideration contemplated by this Agree-
ment (except for future consideration arising from disposition of proceeds from
the Xxxxxxxxxxx Lawsuit payable as described in paragraph 5 above), the Xxxxxx
and Construction hereby, for themselves, their successors and assigns, fully and
forever RELEASE, ACQUIT, AND FOREVER DISCHARGE QLS and its employees, officers,
directors, agents, representatives, successors, assigns and legal representa-
tives, from all claims and causes of action of any kind whatsoever, whether now
known or unknown, asserted or unasserted, that the Xxxxxx or Construction now
have or may have against QLS, its agents, employees, employers, directors,
officers, representatives, successors, assigns and legal representatives,
relating to or arising from (i) the matters and claims that form the basis of
the Lawsuit, and (ii) the execution, negotiation or performance of the Purchase
Agreement, the execution of any promissory note(s) pursuant to
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the Purchase Agreement, and the subsequent sale or disposition of assets by
the Xxxxxx or Construction pursuant to or in connection with the Purchase
Agreement. The Xxxxxx and Construction further agree not to take any action
inconsistent with this Agreement, including providing aid, assistance or
encouragement to any person to bring an action against QLS, except to the
extent, if any, that they may be compelled to provide testimony or documents
pursuant to subpoena or other legal process in any matter initiated by other
persons without their aid, assistance or encouragement.
8. Subject to the consummation of financing described in paragraph
3(a) above and the exchange of other consideration contemplated by this Agree-
ment (except for future consideration arising from disposition of proceeds from
the Xxxxxxxxxxx Lawsuit payable as described in paragraph 5 above), QLS
RELEASES, ACQUITS, AND FOREVER DISCHARGES the Xxxxxx and Construction, their
employees, agents, representatives, successors, assigns and legal
representatives, from all claims and causes of action of any kind whatsoever,
whether now known or unknown, asserted or unasserted, that QLS now has or may
have against the Xxxxxx or Construction, their agents, employees, employers,
directors, officers, representatives, successors, assigns and legal
representatives, relating to or arising from (i) the matters and claims that
form the basis of the Lawsuit, and (ii) the execution, negotiation or
performance of the Purchase Agreement, the execution of any promissory note(s)
pursuant to the Purchase Agreement, and the subsequent sale or disposition of
assets by the Xxxxxx or Construction pursuant to or in connection with the
Purchase Agreement. QLS further agrees not to take any action inconsistent
with this Agreement, including providing aid, assistance or
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encouragement to any person to bring an action against the Xxxxxx or
Construction, except to the extent, if any, that it may be compelled to
provide testimony or documents pursuant to subpoena or other legal process in
any matter initiated by other persons without its aid, assistance or
encouragement.
9. By approval of this Agreement, the undersigned attorneys do
hereby represent that they fully explained the meaning and effect of this
Agreement to their representative clients;
10. This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and to the benefit of all attorneys, agents, employees,
officers, directors, shareholders, partners, heirs, assigns, and legal
representatives of the parties hereto;
11. Each signatory to this Agreement warrants and represents that he
or she has authority to bind the parties for whom such person acts and that the
claims, suits, rights, and/or interests that are the subject matter of this
Agreement are owned by the party asserting them, have not been assigned,
transferred or sold, and are free of encumbrance;
12. This Agreement shall be construed in accordance with the laws of
the State of Texas, without regard to any conflict of laws principles, and shall
be performable in Corpus Christi, Nueces County, Texas;
13. This Agreement constitutes the entire understanding and agreement
between the parties with respect to the subject matter of this Agreement and
supersedes any and all prior understandings, agreements or discussions among the
parties with respect to the subject matter of this Agreement. There are no
representations, agreements, or arrangements or understand-
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ings, oral or written, between or among the parties related to the subject
matter of this Agreement which are not fully expressed in this Agreement;
14. This Agreement may not be modified or amended except by written
executed by all the parties to this Agreement at the time of such amendment;
15. X.X. Xxxxx Construction Company, by its execution hereof, agrees
to the division of any proceeds of the Xxxxxxxxxxx lawsuit in the manner
contemplated by paragraph 5 hereof.
16. This Agreement may be executed in a number of identical counter-
parts, each of which shall be deemed an original for all purposes.
' IN WITNESS WHEREOF the parties have executed this Agreement as of the
dates set forth oppose their respective signatures.
APPROVED AS TO FORM AND SUBSTANCE:
Date:
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X.X. XXXXX
Date:
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XXXX XXXXX
X.X. XXXXX CONSTRUCTION COMPANY
By: Date:
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QUANTUM LEARNING SYSTEMS, INC.
(formerly, CCR, INC.)
By: Date:
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Xxxxx X. Xxxxxxxx, President
Chief Executive Officer and Chairman
APPROVED AS TO FORM ONLY:
AKIN, GUMP, STRAUSS, XXXXX XXXXXX, DROUGHT & XXXXXX, INC.
& XXXX, L.L.P. 0000 XxxxxxxXxxx Xxxxx
0000 XxxxxxxXxxx Xxxxx 300 Convent
000 Xxxxxxx Xxx Xxxxxxx, Xxxxx 00000
Xxx Xxxxxxx, Xxxxx 00000 Telephone: (000) 000-0000
Telephone: (000) 000-0000 Telecopier: (000) 000-0000
Telecopier: (000) 000-0000
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XXXXX X. XXXXXXXX G. XXXX XXXXXXXX
State Bar No. 04153500 State Bar No. 03621020
Federal Bar Xx. 00000 Xxxxxxx Xxx Xx. 00000
XXXXX X. XXXXXXXXX XXXXXXX X. XXXXXX
State Bar No. 17276100 State Bar No. 00788130
Federal Bar No. 13015 Federal Bar No. _____
ATTORNEYS FOR THE XXXXXX ATTORNEYS FOR QLS
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