EXHIBIT 10(yy)
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT made this 30th day of April, 1998 among
Computerized Thermal Imaging, Inc., a Nevada corporation ("CTI"), Xxxxxxxx
Resources Limited, a British Virgin Islands corporation ("LRL"), Y.L. Xxxxxx
("YLH")(LRL and YLH are sometimes collectively referred to as "PURCHASERS"), and
Xxx Xxxxxxxxx ("AG").
WHEREAS:
A. On or about April 22, 1997, CTI issued its 12% Series A Senior
Subordinated Convertible Debenture Due April 30, 1998 in the principal face
amount of [INTENTIONALLY REDACTED. INFORMATION IS THE SUBJECT OF A PENDING
CONFIDENTIAL TREATMENT REQUEST.] to LRL ("DEBENTURE I") and the principal face
amount of [INTENTIONALLY REDACTED. INFORMATION IS THE SUBJECT OF A PENDING
CONFIDENTIAL TREATMENT REQUEST.] to YLH ("DEBENTURE II") (Debenture I and
Debenture II are sometimes collectively "DEBENTURES") which the Purchasers paid
for in full;
B. The Debentures provide, INTER ALIA, that the Holder is entitled
to convert the Debenture into the common stock of CTI under certain
circumstances;
C. The parties have a dispute as to the interpretation of the
meaning and intent of the Debentures, and CTI has commenced an action in the
United States District Court for the Southern District of Florida entitled
COMPUTERIZED THERMAL IMAGING, INC. V. SELECT CAPITAL ADVISORS XX.XX., Case No.
97-3960 (Xxxxxxx) against Purchasers, AG and others ("LAWSUIT"); and
D. The parties wish to resolve and clarify all present disputes
among them and to settle the Lawsuit as among the parties to this Settlement
Agreement.
NOW THEREFORE, it is agreed:
1. DEBENTURES.
(a) The due date of the Debentures shall be extended from April 30,
1998 until December 31, 1998.
(b) Including interest, penalties and other permissible charges as
provided in the Debentures, the parties agree [INTENTIONALLY REDACTED.
INFORMATION IS THE SUBJECT OF A PENDING CONFIDENTIAL TREATMENT REQUEST.].
Provided CTI is not in default under this Settlement Agreement, no further
interest or penalties shall accrue under the Debentures.
(c) CTI shall be entitled to redeem the Debentures in full but not
partially at any time ("REDEMPTION") for Value I or Value II, as the case may
be, at 100% of Value I or Value II, less the dollar amount of any conversions
which have occurred, or the dollar amount of any Notices of Conversions which
were sent or faxed to CTI by LRL or YLH prior to Redemption ("REDEMPTION
PRICE"). A Redemption shall be effectuated by CTI sending to LRL or YLH a
written Notice of Redemption, at the addresses and fax numbers provided in
Section 15 below. If a Notice of Conversion and Notice of Redemption are sent
on the same date, the Notice of Conversion shall be controlling, and the Notice
of Redemption shall be for the balance of Value I or Value II less the dollar
amount of the Notice of Conversion, as applicable to either Purchaser. Any
Notice of Redemption must be for both Debenture I and Debenture II, or such
Notice of Redemption shall be ineffective. Payment of the Redemption Price
shall be made by wire transfer within 4 days after the Notice of Redemption is
sent, to an account or accounts designated by Purchasers within 2 days after the
Notice of Redemption is sent. CTI shall not withhold any amounts from the
Redemption Price for United States or other income tax and shall be required to
pay the Redemption Price upon Redemption in full.
2. FIRST CONVERSION. CTI shall honor the Notice of Conversion
sent by YLH on April 21, 1998 [INTENTIONALLY REDACTED. INFORMATION IS THE
SUBJECT OF A PENDING CONFIDENTIAL TREATMENT REQUEST.] and deliver such common
stock to YLH's agent, as set forth below, freely tradeable and without
restrictive legend, simultaneously with the execution of this Settlement
Agreement. Thus, as of the date this Settlement Agreement is executed, Value II
shall be [INTENTIONALLY REDACTED. INFORMATION IS THE SUBJECT OF A PENDING
CONFIDENTIAL TREATMENT REQUEST.].
3. SUBSEQUENT CONVERSIONS.
(a) CTI shall honor all Notices of Conversion sent by fax to CTI.
The terms and conditions of the Debentures shall govern all conversions except
that:
(i) The conversion price shall be [INTENTIONALLY REDACTED.
INFORMATION IS THE SUBJECT OF A PENDING CONFIDENTIAL TREATMENT REQUEST.].
(ii) The conversion shall be effective when Purchasers fax the
Notice of Conversion to CTI without surrendering the Debentures. Unlegended and
unrestricted CTI shares of common stock, as set forth in the Notice of
Conversion, shall be delivered to Purchasers or their agent, within 3 days from
the date the Notice of Conversion is received. No further documentation shall
be required from Purchasers to effectuate conversion and delivery of the CTI
shares of common stock. The penalty provisions in the Debentures shall apply to
late deliveries of such shares. The Debentures shall be surrendered to CTI
either upon Redemption and payment of the Redemption Price or within 3 days
after the CTI common stock is received by the Purchasers for the last conversion
of the Debentures into CTI common stock, whichever occurs first.
(iii) Purchasers shall be entitled to sell in the aggregate on any
trading day no more than 20,000 shares or 12% of that day's total trading volume
for CTI common stock as reported on NASDAQ, whichever is greater ("MAXIMUM
TRADE"). For example, if the total trading volume of CTI common stock is
760,000 shares, Purchasers shall be entitled to sell 91,200 shares of CTI common
stock. However, nothing in this Settlement Agreement shall require Purchasers
to make the Maximum Trade on any particular trading day.
4. OPINION LETTER. Simultaneously with the execution of this
Settlement Agreement, Purchasers' counsel shall deliver to CTI a letter
expressing the opinion that the holding period for the Debentures has expired
and that CTI may issue unlegended common stock to the Purchasers under the
conversion feature of the Debentures.
5. SETTLEMENT OF LITIGATION. Upon the execution of this
Settlement Agreement, CTI shall discontinue the Litigation with prejudice
against LRL, YLH and AG by filing with the court a stipulation of discontinuance
with prejudice, in a form satisfactory to the attorney for the LRL, YLH and AG,
and any and all documentation or papers necessary to effectuate the
discontinuance.
6. RELEASE. Effective upon the execution and delivery of this
Settlement Agreement, CTI for itself and each of its respective officers,
directors, shareholders, employees, executors, administrators, affiliated
entities, successors, representatives and assigns ("CTI PARTIES") hereby remise,
release and forever discharge LRL, YLH, AG, their parents, affiliates, and/or
subsidiaries, its and their predecessors, successors and assigns, and its and
their past and present officers, directors, employees, servants, agents,
contractors, attorneys and other representatives (collectively "RELEASED
PARTIES") from any and all debts, demands, actions, causes of actions, claims,
specialties, covenants, contracts, controversies, agreements, promises, doings,
omissions, variances, damages, executions, rights, liabilities, suits, sums and
sums of money, accounts, reckonings, presentments, attorneys' liens rights to
attorneys' fees whatsoever, in law or in equity, whether known or unknown, which
any or all of the CTI Parties now has or ever had against the Released Parties
from the beginning of the world to and including the date of this Settlement
Agreement, including without limitation any and all claims arising with respect
to, and/or in connections with the Litigation.
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7. CONFIDENTIALITY. CTI and the Released Parties covenant and
agree to maintain the terms of this Settlement Agreement and all negotiations
relating to the subject matter of this Settlement Agreement as confidential
between CTI and the Released Parties.
8. OTHER AGREEMENTS, ACKNOWLEDGMENTS, REPRESENTATIONS AND
WARRANTIES. CTI and the Released Parties hereby acknowledge, represent,
warrant, affirm and confirm the following:
A. They have carefully read and understand the effect of this
Settlement Agreement; they have had the assistance of separate
counsel, or have elected to waive counsel, in carefully reviewing
discussing and considering all terms of this Settlement Agreement; and
counsel, if any, for each of them has read and considered this
Settlement Agreement and advised such Party to execute the same.
B. Neither CTI nor the Released Parties' execution of this
Settlement Agreement is based upon its or their reliance upon any
representation, understanding or agreement not expressly set forth
herein, and no party (or its agent) had made any representations to
any other party (or its agent) not expressly set forth herein; and
further, but not in limitation of the foregoing, the parties have made
no representations one to another which relate to or affect the
consideration, cause or any condition for which this Settlement
Agreement is granted and which representations have not been expressly
embodied herein.
C. Each of the parties does execute this Settlement Agreement as
its free and voluntary act, without any duress, coercion or under
influence exerted by or on behalf of the other party or any other
party.
D. Each of the parties has full and complete authorization and
power to execute this Settlement Agreement in the capacity herein
stated; and this Settlement Agreement is a valid binding and
enforceable obligation of each of the parties and does not violate any
law, rule, regulation, contract or agreement otherwise enforceable by
any of the parties.
E. CTI acknowledges that the Debentures are in full force and
effect, and otherwise enforceable against CTI in accordance with their
terms and conditions except as modified by this Settlement Agreement
and have not been rescinded, conveyed, transferred, assigned, pledged
or otherwise encumbered.
F. This Settlement Agreement and its terms and conditions have
been duly authorized by all proper and necessary corporate action of
CTI, and is enforceable against CTI in strict accordance with its
terms.
G. CTI warrants and represents that there are 100,000,000 shares
of its common stock, $0.001 par value authorized and, as of February
23, 1998, 44,567,975 shares of its common stock outstanding and that
there are sufficient authorized shares to perform its obligations
under this Settlement Agreement including but not limited to
sufficient authorized shares available to convert the Debentures into
common stock at a price which is at least 100% less than the current
trading price as reported on NASDAQ.
9. SEPARABILITY. If any terms, provision, covenant or condition
of this Settlement Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
10. APPLICABLE LAW. This Settlement Agreement shall be governed by
and construed in accordance with the laws of the State of New York unless
preempted by federal law.
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11. COUNTERPARTS. This Settlement Agreement may be executed in
multiple identical counterparts, each of which when duly executed shall be
deemed an original, and all of which shall be construed together as one
agreement.
12. TIME IS OF THE ESSENCE. Time shall be of the essence with
respect to each and every of the various undertakings and obligations set forth
in this Settlement Agreement.
13. NO MODIFICATION OR WAIVER. None of the terms or provisions of
this Settlement Agreement, may be changed, waived, modified, discharged, or
terminated except by instrument in writing executed by the party against whom or
which enforcement of the change, waiver, modification, discharge or termination
is asserted. None of the terms or provisions this Settlement Agreement shall be
deemed to have been abrogated or waived by reason of any failure or failures to
enforce the same.
14. SUCCESSORS AND ASSIGNS. The provisions of this Settlement
Agreement shall be binding upon, and shall inure to the benefit of, the
respective successors, assigns, and participants of CTI, the Purchasers and AG
and, the respective heirs, successors and assigns of the parties.
15. NOTICES. Notices required to be given under this Settlement
Agreement shall be sent by Fedex or other express mail delivery, and by
facsimile to the parties at the addresses and fax numbers set forth below, as
follows:
If to CTI:
Computerized Thermal Imaging, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000
Fax: 000-000-0000
If to YLH or AG:
Portfolio investments Strategies Corp.
0 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
If to LRL:
x/x Xxxxx Xxxxx Xxxxxx Xxxxxxxx & Xxxxxxx, X.X.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att'n: Xxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
Notices shall be effective as of the time they are sent.
16. CONFLICTS. In the event there is a conflict between the terms
and conditions of this Settlement Agreement, and the terms and conditions of the
Debentures or the provisions of a certain Offshore Securities Subscription
Agreement between CTI and the Purchasers, then the terms and conditions of this
Settlement Agreement shall be controlling, and any and all previous transactions
between the parties shall otherwise be ratified.
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This Settlement Agreement has been executed as of the date first above
written.
COMPUTERIZED THERMAL IMAGING, INC.
By: /s/ Xxxxx X. Xxxxxxx
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CEO
XXXXXXXX RESOURCES LIMITED
By:
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Y.L. XXXXXX
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XXX XXXXXXXXX
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