SETTLEMENT AGREEMENT
AND MUTUAL RELEASE
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "Agreement") is entered
into this 22nd day of August, 1995, by and among Anchor Pacific Underwriters,
Inc., a Delaware corporation ("Anchor") and Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, Xxxxxx Xxxxxxx, and Xxxxxx Xxxxx
(collectively, the "Shareholders"). Anchor and the Shareholders are sometimes
referred to individually as a "Party" and collectively as the "Parties."
RECITALS
A. Anchor Pacific Underwriters, Inc., a California corporation ("Old
Anchor"), Anchor Acquisition, Inc., a California corporation ("Anchor
Acquisition") and Xxxxxx, Xxxxxxx & Xxxxxxx, Inc., a California corporation
("PKW") entered into that certain Agreement of Reorganization effective as of
August 3, 1994 (the "PKW Agreement"), pursuant to which on September 19, 1994
(the "Effective Date"), Anchor Acquisition merged with and into PKW, with PKW
being the surviving company (the "Merger").
B. Pursuant to the PKW Agreement, on the Effective Date, the 35,677
shares of Common Stock of PKW outstanding immediately prior to the consummation
of the Merger, by virtue of the Merger, were converted into 120,077 shares of
Common Stock (the "Old Anchor Shares") of Old Anchor.
C. On January 6, 1995, Old Anchor merged with and into System Industries,
Inc. (which changed its name to "Anchor Pacific Underwriters, Inc. and, as
indicated above, is referred to in this Agreement as "Anchor"), and each share
of Common Stock of Old Anchor outstanding immediately prior to the consummation
of the merger with System Industries was converted into 10 shares of Anchor
Common Stock.
D. Subsequent to the conclusion of the Merger, Anchor has been required
to advance funds on behalf of PKW to cover various unexpected expenses and
liabilities.
E. In light of the substantial funding provided by Anchor to cover such
unexpected expenses and liabilities, the Shareholders and Anchor believe that a
reduction in the number of Old Anchor Shares received by the Shareholders is
appropriate.
NOW, THEREFORE, in consideration of the mutual covenants and other
consideration set forth below, it is hereby agreed as follows:
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1. Upon execution of this Agreement, the Shareholders shall return to
Anchor for cancellation or, in Anchor's discretion, to hold as treasury shares
for subsequent reissuance, 248,710 shares of Anchor Common Stock. The shares of
Anchor Common Stock to be returned by each Shareholder shall be equal to the
total number of shares to be so returned multiplied by a fraction, the numerator
of which shall be equal to the number of Old Anchor Shares such Shareholder
received pursuant to the Merger and the denominator of which shall be equal to
the total number of Old Anchor Shares that all of the Shareholders received
pursuant to the Merger.
2. Each of the Parties on behalf of itself and its affiliates, agents,
employees, attorneys, parents, subsidiaries, partnerships, partners, trusts,
shareholders, officers and directors, executors, administrators, trustees,
beneficiaries, predecessors and the heirs, successors and assigns of each of
them, hereby releases and forever discharges the other Party, and all past,
present and future parents, subsidiaries and affiliates of the released party,
and all past, present and future officers, directors, employees, agents,
attorneys, shareholders, successors, heirs and assigns of the released party, of
and from any and all claims, demands, damages, debts, liabilities, obligations,
costs, expenses, liens, actions, and causes of action of every kind, known and
unknown, arising directly or indirectly out of, or in any way connected with or
based upon the PKW Agreement and the transactions contemplated thereby.
3. The Parties to this Agreement covenant that they will never commence
or prosecute any claim, demand, or cause of action of any nature whatsoever that
is based upon any claim, demand, damage, debt, liability, obligation, cost,
expense, lien, action, or cause of action released by the terms of this
Agreement.
4. Each of the Parties to this Agreement represents and warrants that it
has not assigned or transferred any claims released by it herein to any other
person or entity. Each Party agrees to indemnify the other for any loss caused
by breach of such warranty.
5. This Agreement is intended to, and the Parties warrant that it will,
dispose of all liability of each of them to the other arising out of or related
to the PKW Agreement and the transactions contemplated thereby.
6. There is a risk that, subsequent to the execution of this Agreement,
either or both of the Parties will incur and suffer damages, losses, or injuries
which are unknown and unanticipated at the time this Agreement is signed.
Further, there is a risk that damages, losses, or injuries which are known may
be or may become more serious than either of the Parties now
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expects or anticipates. The Parties shall assume the above-mentioned risks and
this Agreement shall apply to all known or unanticipated results of the
occurrences or circumstances described above as well as those known or
anticipated and, upon the advice of legal counsel, the Parties hereby waive all
rights under California Civil Code Section 1542, which section has been fully
explained, and which provides:
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.
7. This Agreement constitutes the entire agreement between the Parties
with respect to the subject matter hereof. This Agreement supersedes all prior
negotiations, discussions, understandings and agreements relating to the subject
matter of this Agreement.
8. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
9. Each of the Parties to this Agreement has obtained the advice of
independent legal counsel before entering into this Agreement, and enters into
this Agreement with full knowledge of its significance.
10. This Agreement is the product of negotiation and preparation by and
among each Party hereto and its attorneys. Therefore, the Parties acknowledge
and agree that this Agreement shall not be deemed to have been prepared or
drafted by one Party or another, and that it shall be construed accordingly.
The Parties to this Agreement expressly waive the provisions of applicable law
which provide that ambiguities are to be construed against the drafting Party.
11. The Parties hereto shall reasonably cooperate with each other,
including executing all further documents, if any, that may be necessary to
carry out the purpose and intent of this Agreement.
12. The Agreement may be signed in counterparts by the Parties hereto and
shall be as valid and binding on each Party as if fully executed all on one
copy.
13. In the event of any dispute between the Parties hereto arising out of,
or in connection with, the provisions of this Agreement or any documents
executed and delivered pursuant to this Agreement, the prevailing Party shall be
entitled to
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reasonable attorneys' fees, costs of suit, and necessary disbursements, in
addition to whatever damages or other relief the prevailing Party is entitled to
in connection with the dispute.
14. No supplement to, or modification, waiver, or amendment of this
Agreement shall be binding unless executed in writing by the Party against whom
enforcement of such supplement, modification, waiver or amendment is sought.
15. The Parties hereto deem this Agreement to be executed and of binding
legal effect as of the date first set forth above.
ANCHOR PACIFIC UNDERWRITERS, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxx
President
/s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
--------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxx
--------------------------
Xxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
--------------------------
Xxxxxx Xxxxx
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