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Exhibit
10.7
SETTLEMENT AGREEMENT
AND FULL AND FINAL RELEASE
This Settlement Agreement and
Full and Final Release (“Settlement Agreement”) is
entered into effective September 10, 2007, by and between
Michael H. Schoeffler, an individual (“Schoeffler”) and
Quantum Fuel Systems Technologies Worldwide, Inc., a Delaware
corporation, (“Quantum”) with respect to the following
facts:
A. On March 5, 2007,
Quantum commenced arbitration (the “Arbitration”)
against Schoeffler with the American Arbitration Association
(“AAA”), seeking an award that Quantum is not liable to
Schoeffler. Schoeffler has counterclaimed against Quantum in the
Arbitration.
B. Quantum and Schoeffler
(collectively referred to as the “Parties”), without
admitting any liability or fault, now wish to settle and compromise
their dispute in accordance with the terms set forth
below.
NOW, THEREFORE, in
consideration of the following mutually agreed covenants and other
valuable consideration, the receipt and sufficiency of which is
acknowledged, the Parties agree as follows:
1. Definitions . For
purposes of this Settlement Agreement, the following definitions
shall apply:
A. “Quantum”
means and includes its predecessors, successors, assigns, parents,
subsidiaries, affiliates, officers, directors, employees,
shareholders, attorneys, agents, representatives and heirs, and any
person or entity who may claim by or through any of
them.
B. “Schoeffler”
means and includes his predecessors, successors, assigns,
affiliates, employees, employers, attorneys, agents,
representatives and heirs, any entity in which Schoeffler has an
ownership interest, and any person or entity who may claim by or
through any of them.
2. Settlement Amount .
Quantum shall pay Schoeffler the total sum of Six Hundred Thousand
($600,000) dollars (the “Settlement Amount”). Upon
execution of this Agreement, the parties shall enter a Consent
Arbitration Award, in the form attached to this Agreement as
Exhibit A. The Settlement Amount shall be paid to Schoeffler and
his counsel, with normal employee withholding for all payments to
Schoeffler, as follows:
A. The Settlement Amount
shall be paid to Schoeffler in five installments as
follows.
1 of 4
B. The first installment
shall be paid upon execution of this Agreement on
September 10, 2007, in the amount of $150,000, $50,000 of
which shall be paid directly to the order of Schoeffler’s
counsel. The payment to Schoeffler’s counsel shall not be
subject to employee deductions and withholdings, shall not be
included on Schoeffler’s W2 but, instead, Quantum will issue
an IRS Form 1099 (misc) to Schoefler’s counsel, the law firm
of Boveri Murphy Rice & LaDue, LLP. Schoeffler agrees to
indemnify if Quantum incurs under-withholding liability as a result
of this single $50,000 payment to Schoeffler’s
counsel.
C. The second installment
shall be paid on October 10, 2007, in the amount of
$100,000.
D. The third installment
shall be paid on November 10, 2007, in the amount of
$100,000.
E. The fourth installment
shall be paid on December 10, 2007, in the amount of
$100,000.
F. The fifth installment
shall be paid on January 10, 2008, in the amount of
$150,000.
3. Default
.
A. If Quantum fails to pay
any of the installment amounts within seven (7) calendar days
of the date that the installment is due under Section 2 of
this Agreement, Schoeffler may make email demand to Quantum and its
counsel that it pay the installment by sending an e-mail demand to
the following e-mail addresses: klombardo@tecstarinc.com ;
pmc@krwlaw.com .
B. If Quantum fails to pay
the installment by the close of the third business day after
Schoeffler’s demand for payment, Quantum shall be in
Default.
C. In the event of Default,
the Arbitrator shall, upon verification of the fact of Default,
enter an Award in Schoeffler’s favor in the amount of One
Million One Hundred Thousand ($1,100,000) dollars, less any
installment payments made by Quantum, which Award shall be
inclusive of costs, attorney fees, and interest to the date of the
Award. The Arbitration Award may be enforced by filing an action to
confirm the award and reduce it to judgment in the U.S. District
Court for the Northern District of Indiana. Quantum hereby consents
to the exclusive ju
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