Agreement Regarding Treatment of Claims
This Agreement Regarding Treatment of Claims (this "Agreement") is made on
the 6th day of December 1999 by and between Xxxxxxx Xxxx ("Xxxx") and
Continental Investment Corporation, a Georgia corporation ("CIC").
RECITALS:
The directors of CIC, through their counsel, have advised Xxxx that they
likely will seek to have CIC convert the existing involuntary bankruptcy
proceeding filed against it into a voluntary proceeding under chapter 11 of the
United States Bankruptcy Code.
The directors of CIC, through their counsel, have advised Xxxx that they
intend to submit a proposed plan of reorganization (the "Plan") to the
Bankruptcy Court.
Xxxx and CIC wish to set forth their Agreement how Xxxx'x equity interest
in CIC and his claims as a creditor of CIC would be treated under the Plan.
AGREEMENT:
1. NATURE OF XXXX'X INTERESTS REGARDING CIC.
(a) Xxxx is the owner and holder of 1,662,953 shares of the common stock of
CIC (herein, "Xxxx'x Equity Claim").
(b) Xxxx has paid (1) $50,000 in October 1998 to Xxxx Xxxxxx & Associates as
legal fees for Xxxxxx'x representation of X. X. Xxxxxx, Xxxxxx Xxxx, and
Xxxxxx Xxxxxxxx in connection with XXXXXX X. XXXX and XXXXXXXX X. XXXXXXXX,
(2) $25,000 to Carrington, Coleman, Xxxxxx & Xxxxxxxxxx, L.L.P. ("CCSB") on
12/13/98 as a retainer for CCSB's representation of Morris, Luna, and
Blahitka in those same causes, (3) $42,506.88 on 2/8/99 to CCSB for same
purposes, and (4) $73,613.86 on 2/24/99 to CCSB for same purposes. Xxxx
believes that in undertaking the XXXXXX X. XXXX suit, each of Morris, Luna,
and Blahitka did so in the capacity of a CIC director who had been
illegally removed from office by Xxxx Xxxxxxxx and those working in concert
with Xxxx Xxxxxxxx, and each of them did so for the benefit of CIC and in
order to stop what he regarded to be, based on information that Xxxx and
his agents had brought to light, looting, waste, and mismanagement of CIC's
assets by Xxxx Xxxxxxxx and those working in concert with him. Xxxx
believes that in defending the XXXXXXXX X. XXXXXXXX suit, Morris, Luna, and
Blahitka were acting in the interests of and for the benefit of CIC and in
order to stop what each of them regarded to be, based on information that
Xxxx and his agents had brought to light, looting, waste, and mismanagement
of CIC's assets by Xxxx Xxxxxxxx and those working in concert with him.
Accordingly, Xxxx believes he has a valid claim against CIC for the amounts
so paid by Xxxx, whether by way of reimbursement, contribution,
subrogation,
indemnity, or otherwise (herein, as same may be increased pursuant to
subparagraph (c) below, "Xxxx'x Reimbursement Claim").
(c) Xxxx has been advised that CCSB has outstanding invoices for its work on
behalf Messrs. Morris, Blahitka, and Xxxx totaling $192,862.91. Xxxx has
agreed to pay these amounts, believes they arise from precisely the
circumstances described in subparagraph (b) above, and believes that such
payment likewise will give rise to a valid claim by Xxxx against CIC.
2. AGREEMENT BETWEEN XXXX AND CIC REGARDING PROSECUTING LITIGATION.
At or near the time of this Agreement, Xxxx and CIC are entering into a separate
agreement (the "Litigation Agreement") setting forth the manner in which Xxxx
and CIC shall prosecute their respective claims in XXXX X. XXXXXXXX, ET AL. and
XXXX V. XXXXX XXXXXXXX, LLP, ET AL. (both pending in the United States District
Court for the Northern District of Texas, Dallas Division), shall pool any and
all amounts recovered by either or both of them in such causes, and shall
allocate such recovery among themselves.
3. TREATMENT OF XXXX'X EQUITY AND REIMBURSEMENT CLAIMS UNDER PLAN.
Xxxx agrees to the proposed treatment of Xxxx'x Equity Claim and Xxxx'x
Reimbursement Claim, as set forth in the Plan, such that Xxxx shall receive an
additional 10% of the recovery proceeds that are pooled under the Litigation
Agreement.
4. MISCELLANEOUS.
(a) If the Plan setting forth the foregoing treatment of Xxxx'x claims is not
finally approved by the bankruptcy court on or before May 30, 2000, then
this Agreement shall expire and be of no further force or effect, unless
extended in writing by Xxxx and CIC or unless otherwise ordered by the
bankruptcy court.
(b) To induce Xxxx to enter into this Agreement, CIC represents and warrants
that the information it has furnished to Xxxx pursuant to a letter
agreement concerning confidentiality entered into on November 3, 1999 is
accurate in all material respects, and that CIC has disclosed to Xxxx all
material facts about the status of negotiations concerning the so-called
Xxx Xxxx Site.
(c) This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas and any and all applicable federal laws.
AGREEMENT REGARDING TREATMENT OF CLAIMS - PAGE 2
IN WITNESS WHEREOF, Xxxx and CIC have signed this Agreement.
CONTINENTAL INVESTMENT CORPORATION
________________________________ By:____________________________________
Xxxxxxx Xxxx, by his attorney, Name:
Xxxxxxxx X. Xxxxx, with permission Title:
AGREEMENT REGARDING TREATMENT OF CLAIMS - PAGE 3
