Exhibit 10.1
SETTLEMENT AGREEMENT
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This Settlement Agreement (the "Agreement") entered into as of the last
date written below by and between Big Sky Laser Technologies, Inc. ("BSLT"), a
Montana Corporation with its principal place of business at 000 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx, and Premier Laser Systems, Inc. ("PLSI"), a California
corporation, having its principal place of business at 3 Xxxxxx, Irvine,
California
WITNESSETH:
WHEREAS, PLSI entered into various agreements with BSLT to purchase OEM
laser components (the "Goods") from BSLT destined to be integrated into dental
lasers produced by PLSI;
WHEREAS, pursuant to such agreements, PLSI has not yet paid for all of
the Goods manufactured by, or manufactured and shipped to PLSI by, BSLT within
the time agreed previously by the parties; and
WHEREAS, PLSI and BSLT wish to agree upon a payment mechanism that
would permit PLSI to pay for the Goods and to settle the difference among
themselves over the payment for the Goods in order to avoid further discussions,
potential litigation, and the additional expense of further time and money by
the parties to resolve these issues;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, IT IS HEREBY AGREED:
1. LIQUIDATION OF DEBT. The parties hereby agree that, as of the date
of this Agreement, the total amount due and owing by PLSI to BSLT in connection
with the purchase of the Goods is the sum of Five Hundred Ninety-One Thousand
Nine Hundred Sixteen and 6/100 Dollars ($591,916.06) (hereafter the "Liquidated
Debt"). This sum may not be reduced by any claim for reduction or set-off that
PLSI may have had, has now, or will have against BSLT other than as set forth
herein; and PLSI agrees to pay this sum to BSLT pursuant to, and only pursuant
to, the terms and conditions set forth in this Agreement
2. ISSUANCE OF CONVERTIBLE DEBENTURES.
2.1. AMOUNT OF DEBENTURES ISSUED. Simultaneously with the
execution of this Agreement, PLSI shall issue to BSLT
a series of six debentures (the "Debentures") as
follows: five debentures in the amount of One Hundred
Thousand Dollars and 00/100 U.S. Dollars (US$
100,000.00) and one debenture in the amount of
Ninety-One Thousand Nine Hundred Sixteen and 06/100
U.S. Dollars (US$ 91,916.00) each in the form set
forth in Exhibit A.
The Debentures shall be convertible into the Common
Stock of PLSI (the "Underlying Shares" or "Shares")
pursuant to the terms and conditions set forth in the
Debentures. Following the issuance of the Debentures,
the Debentures shall thereafter represent the
Liquidated Debt, and thereafter there shall be no
independent debt from PLSI to BSLT with respect to
the payment of the purchase price of the Goods.
2.2. REGISTRATION OF THE DEBENTURES. Within five (5)
Business Days of the execution of this Agreement and
issuance of the Debentures (or in the case of
issuance of New Debentures as provided in
subparagraph 2.3 below, within five (5) days of the
issuance of the New Debentures), PLSI agrees to file
the necessary documentation with the SEC to register
the Underlying Shares under the Act, and to
thereafter prosecute such application in good faith
and with its best efforts. A copy of all filings by
PLSI with respect to the Underlying Shares shall be
provided to BSLT by the notice procedures set forth
in subparagraph 10.1 below within two (2) Business
Days on which the filing was made with the SEC. In
addition, Notice of the effectiveness of such
registration shall be given by PLSI to BSLT within
two (2) Business Days of the effectiveness of such
Registration.
2.3. APPLICABLE PROCEDURES IF LIQUIDATED DEBT IS NOT
SATISFIED. If, after the conversion of all the
Debentures and sale of all the Underlying Shares, the
Liquidated Debt, as reduced by the price received by
BSLT from the sale of the Underlying Shares and any
cash payments made by PLSI to BSLT in lieu of
conversion or under the terms of the Debentures, is
not reduced to an amount less than $50,000 (Fifty
Thousand Dollars), BSLT shall have the option, at its
sole discretion and after Notice as provided in
subparagraph 10.1 below, (a) to require PLSI to issue
immediately new Debentures (in the form of the
Debenture attached as Exhibit A) to satisfy the
remainder of the Liquidated Debt, (b) to pay
immediately in cash to BSLT the remainder of the
Liquidated Debt, or (c) both to issue immediately new
Debentures (the "New Debentures") and to pay
immediately in cash the Liquidated Debt, with the
amounts to be allocated between the new Debentures
and cash payments in a proportion determined at the
sole discretion of BSLT and as set forth in the
Notice. The procedure set forth in this subparagraph
2.3 may be repeated as many times as necessary until
the Liquidated Debt has been satisfied or paid in
full. For purposes of computing whether or not the
Liquidated Debt has been satisfied through the sale
of the Debentures, any sales of the Underlying Shares
more than two (2) trading days after the conversion
of such Underlying Shares (other than sales that were
made later than such period because of causes beyond
BSLT's control) shall be deemed to have been made at
the higher of (a) the closing price of the Underlying
Shares two (2) days after conversion or (b) the
actual sale price of the Underlying Shares.
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2.4. ABSENCE OF RESTRICTIONS ON THE NEW DEBENTURES.
Underlying Shares obtained by BSLT as a result of the
conversion of New Debentures shall not be subject to
the limitation set forth in paragraph 3 below.
3. LIMITATION ON SALE OF SHARES Commencing on the effective date of the
registration of the Underlying Shares, BSLT agrees that it will not sell on any
public exchange an amount of the Underlying Shares for a sales price in excess
of Two Hundred Thousand U.S. Dollars (US$ 200,000) in any calendar month, except
as provided in subparagraph 2.4 above. For purpose of this paragraph 3, the
value of Shares sold in any calendar month shall be calculated by multiplying
the number of Shares sold during such month times the sale price of one share in
the last sale of the Shares by BSLT during that calendar month.
4. MANDATORY CONVERSION. PLSI shall have the option, but not the
obligation, to require BSLI, upon five (5) business days notice, to convert any
or all of the Debentures, provided that
4.1. The Underlying Shares are covered by a registration
statement freely permitting BSLI to sell the
Underlying Shares on a public market;
4.2. The Underlying Shares shall not have been delisted
from NASDAQ or any other securities exchange;
4.3. The Underlying Shares, at the time of conversion,
shall have a bid value no less than $1.50;
4.4. The conversion of the Debentures will not result in
BSLI having sold more than $200,000 of the Underlying
Shares in any calendar month;
5. RELEASES AND WAIVERS.
5.1. GENERAL RELEASE BY PLSI. PLSI, its parents,
subsidiaries, affiliates, their officers, directors,
shareholders, employees. agents, successors in
interest, and predecessors in interests (hereafter
the "PLSI Releasors") hereby release BSLT, its
parents, subsidiaries, affiliates, their officers,
directors, shareholders, employees. agents,
successors in interest, and predecessors in interest
(hereafter the "BSLT Releasees") from (i) any and all
claims for damages, suits, causes of action,
liability, or obligations of any kind or nature
whatsoever which the PLSI Releasors may have hade
against the BSLT Releasees from the beginning of time
up to an including the date of this Release and (ii)
any and all claims for damages, suits, causes of
action, liability, or obligations of any kind or
nature whatsoever which the PLSI Releasors may have,
in the past, present or future, against the BSLT
Releasees arising from the BSLT's sale of the Goods
to PLSI (the "PLSI Claims"). Notwithstanding the
foregoing, this release shall not affect: (A) any
obligations that BSLT may have under any product
liability theories (including indemnification or
contribution obligations to PLSI) with respect to any
Goods that BSLT has previously delivered to PLSI, or
which it may deliver in the future; (B) any
obligations to replace or repair the Goods under
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warranties provided by BSLT where by their terms such
warranties have not yet expired; or (C) any
obligations BSLT may have to PLSI under any
agreement, under the Uniform Commercial Code, or
otherwise, with respect to Goods which have not yet
been delivered. For purposes of determining the
warranty period under clause (B) above, the warranty
period shall be deemed to have commenced upon
delivery of the goods to PLSI.
5.2. RELEASE BY BSLT. Upon issuance of the Debentures to
BSLT (the fulfillment of this condition to be
hereafter referred to as the ("Release Event"), BSLT,
its parents, subsidiaries, affiliates, their
officers, directors, shareholders, employees. agents,
successors in interest, and predecessors in interests
(hereafter the "BSLT Releasors") hereby release PLSI,
its parents, subsidiaries, affiliates, their
officers, directors, shareholders, employees, agents,
successors in interest, and predecessors in interest
(hereafter the "PLSI Releasees") from any and all
claims for damages, suits, causes of action,
liability, or obligations of any kind or nature
whatsoever which the BSLT Releasors may have, in the
past, present or future, against the PLSI Releasees
arising from BSLT's sale of the Goods to PLSI (the
"BSLT Claims").
5.3. ACKNOWLEDGMENTS AND WAIVERS. The parties each
acknowledge their joint intention that this Agreement
shall be effective as a full and final accord and
satisfaction, and settlement of, and as a bar to,
each and every of the BSLT Claims and the PLSI Claims
(the "Claims") which each of the BSLT Releasors or
the PLSI Releasors (the "Releasing Parties") now has
or has had in the past, or might have in the future
against any of the BSLT Releasees and the PSLI
Releasees (the "Releasing Parties"). In connection
with such waiver and relinquishment, on behalf of
each other, the parties acknowledge that they or
their attorneys now know or believe to be true with
respect to the subject matters of this Agreement, but
that it is their intention that the general releases
herein given shall be and remain in full force and
effect, notwithstanding the discovery of any such
different or additional facts. Therefore, they
severally acknowledge that they have been informed by
their attorneys of, and that they are familiar with,
Section 1542 of the CIVIL CODE of the State of
California, which provides as follows:
"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."
The parties, on behalf of themselves, and each other,
hereby waive and relinquish all rights and benefits
they have or might have under Section 1542 of the
CIVIL CODE of the State of California, to the full
extent that they may lawfully waive all such rights
and benefits pertaining to the subject matters of
this Agreement.
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6. REMEDIES. Prior to the Release Event, and in the event of any
default by PLSI under this Agreement or under Section 3 of the Debentures, BSLT
will be entitled to seek against PLSI any or all available legal or equitable
remedies arising from such default . It is further agreed that, if BSLI or PLSI
shall prevail in any suit against the other , this Agreement, and or the
Debentures, the prevailing party shall be entitled to its costs and attorneys
fees.
7. REPRESENTATIONS AND WARRANTIES OF PLSI. PLSI hereby represents and
warrants to BSLT as follows:
7.1. CORPORATE QUALIFICATIONS. PLSI is a California
corporation in good standing, is qualified to do
business in the State of California, and is subject
to no legal disability which would prevent it from
entering into this Agreement
7.2. CORPORATE APPROVALS. PLSI has taken all steps
necessary to receive, and has received, all approvals
of shareholders, officers and directors required by
its Articles, By-Laws, and any other understandings
among its shareholders, officers and directors in
order to enter into this Agreement and to issue the
Convertible Debentures as provided herein.
7.3. BREACH OF OTHER AGREEMENTS. Entry by PLSI into this
Agreement and issuance by PLSI of the Convertible
Debentures as provided herein will not breach any
rights of any third parties by law or agreement and
will not breach any understandings or agreements,
whether oral or written, by and among PLSI, its
parents, subsidiaries, affiliates and any third
parties.
7.4. ABSENCE OF UNDISCLOSED LIABILITIES. PLSI does not
have any material liability, claim or obligation of
any nature (whether accrued contingent or otherwise)
which (a) as of the date of the latest PLSI financial
statements, is not disclosed or reserved for in the
latest PLSI financial statements and which is
required to be disclosed or reserved for in
accordance with accounting principles applied by PLSI
on a consistent basis in past years or (b) arose
after the date of latest PLSI financial statements
other than in the ordinary course of business.
7.5. FRAUDULENT CONVEYANCE. PLSI represents and warrants
that neither the issuance of the Debentures to BSLT
nor the payment of any sums to BSLT is now, or will
be in the future, a fraudulent conveyance as defined
by applicable law and that neither the transfer of
the Debentures nor the payment of any sums to BSLT
will otherwise give rise to a claim by any other of
the creditors of PSLI or affiliated entities to set
aside and/or recover the Debentures or payments to
BSLT to the benefit of such creditors.
7.6. COMPLIANCE WITH THE ACT. PLSI has been, is now, and
will continue to remain in compliance with the Act in
connection with the issuance of the Debentures and
all other actions required to be taken by it under
this Agreement. PLSI does not know of any fact or
condition that has not already been reported to
the Commission in its public filings and that would
have any bearing upon the ability of PLSI to register
Underlying Shares under the Act.
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7.7. OPINION OF COUNSEL. Simultaneously with the execution
of this Settlement Agreement, Xxxxx and Xxxxxx will
provide its legal opinion, which shall be binding on
Xxxxx and Xxxxxx as to BSLT, that the representations
and warranties of PSLI as set forth in sections 7.1
and 7.2 above, to the best of its knowledge, after
the exercise of due diligence, are true, accurate and
are not rendered misleading by the omission of PLSI
to disclose any additional material fact to BSLT in
connection with said warranties and representations
and that said Debentures are exempt from registration
under the Act.
8. REPRESENTATIONS AND WARRANTIES OF BSLT. BSLT hereby represents and
warrants to PLSI as follows:
8.1. CORPORATE QUALIFICATIONS. BSLT is a Delaware
corporation in good standing, is qualified to do
business in the State of California, and is subject
to no legal disability which would prevent it from
entering into this Agreement
8.2. CORPORATE APPROVALS. BSLT has taken all steps
necessary to receive, and has received, all approvals
of shareholders, officers and directors required by
its Articles, By-Laws, and any other understandings
among its shareholders, officers and directors in
order to enter into this Agreement.
8.3. BREACH OF OTHER AGREEMENTS. Entry by BSLT into this
Agreement will not breach any rights of any third
parties by law or agreement and will not breach any
understandings or agreements, whether oral or
written, by and among BSLT, its parents,
subsidiaries, affiliates and any third parties.
8.4. KNOWLEGE OF, AND CAPACITY TO ASSUME, ECONOMIC RISK.
BSLT acknowledges and represents that:
8.4.1. BSLT is an "accredited investor" as defined
in 17 U.S.Css.230.501(a);
8.4.2. BSLT has reviewed the annual report on form
10-K/A for the fiscal year ended March 31,
1999, and the quarterly report on form 10-Q
for the quarter ended June 30, 1999;
8.4.3. BSLT is in a financial position to hold the
Shares for an indefinite period of time, is
able to bear the economic risk of an
investment in the Shares and is able to
withstand a complete loss of its investment
in the Shares;
8.4.4. BSLT has the knowledge and experience in
business and financial matters that make it
capable of evaluating the merits and risks
of an investment in the Shares;
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8.4.5. BSLT understands that an investment in the
Shares is highly speculative and involves a
high degree of risk but believes that an
investment in the Shares is suitable based
upon its investment objectives and financial
needs, and that it has adequate means to
undertake the risk and for providing for its
current financial needs and has no need for
liquidity of investment with respect to the
Shares;
8.4.6. BSLT has been given access to full and
complete information regarding PLSI and has
utilized that access to its satisfaction for
the purpose of obtaining information
concerning PLSI, an investment in the Shares
and the terms and conditions of this
offering of the Shares, and has had the
opportunity to ask questions of, and receive
answers from, representatives of PLSI, for
the purpose of obtaining any additional
information to the extent reasonably
available that is necessary to verify the
information provided;
8.4.7. BSLT recognizes that an investment in the
Shares involves significant risks, including
but not limited to, the risk of economic
loss from the operations of PLSI due to the
limited operating history of PLSI and the
risk of economic loss from the operations of
PLSI;
8.4.8. BSLT understands that the Shares may be sold
only (i) upon registration of the Shares
pursuant to the Securities Act of 1933 (the
"Act") or (ii) in a transaction either (a)
not subject to the Act or (b) in compliance
with the terms and conditions of an
exemption from the Act.
9. DEFINITIONS. In addition to the capitalized terms (such as
"Liquidated Debt") defined elsewhere, the below terms, whether capitalized or
not, will have the meanings ascribed to them in this paragraph 9 as follows.
9.1. "Business Day" means any day except Saturday, Sunday
and any day which shall be a legal holiday or a day
on which banking institutions in the State of Montana
or the State of California are authorized or required
by law or other government action to close.
9.2. "Commission" means the Securities and Exchange
Commission.
9.3. "Common Stock" means the Class A Common Stock, no par
value per share, of PLSI and stock of any other class
into which such shares may hereafter have been
reclassified or changed.
9.4. "Person"means a corporation, an association, a
partnership, organization, a business, an individual,
a government or political subdivision thereof or a
governmental agency.
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9.5. "Act" means the Securities Act of 1933, as amended.
9.6. "Underlying Shares" means the shares of Common Stock
issuable upon conversion of any or all of the
Debentures.
10. MISCELLANEOUS.
10.1. NOTICE. Whenever notice is permitted or required by
this Agreement, it shall be deemed given as of the
date of receipt if sent by facsimile transmission to
the numbers shown below, or by a nationally
recognized overnight courier, signature required, and
addressed to the party at such address shown below,
or at such other address or facsimile numbers as the
party may time to time give by written notice.
For notice to PLSI:
Premier Laser Systems, Inc
Attn: Chief Financial Officer.
3 Morgan
Xxxxxx, Xxxxxxxxxx 00000
Fax: 000.000.0000
with a copy to
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, XX 00000
Fax: 000-000-0000
For notice to BSLT
Xx Xxxxx
Big Sky Laser International, Inc.
000 Xxxxxxxx Xxxx, Xxxxx X
Xxxxxxx, XX 00000
Fax: 000-000-0000
with a copy to
Xxxxxx Xxxxxxx Xxxxx
Barkats & Associates, Chartered
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: 000-000-0000
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Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at
the facsimile telephone number specified in this
subparagraph prior to 4:00 p.m. (P.S.T, or P.D.S.T
when applicable), (ii) the date after the date of
transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone
number specified in this Section later than 4:00 p.m.
(P.S.T, or P.D.S.T when applicable) on any date and
earlier than 11:59 p.m. (P.S.T, or P.D.S.T when
applicable) on such date, (iii) the Business Day
following the date of sending, if sent by a
nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such
notice is required to be given.
10.2. ASSIGNMENT. This Agreement may not be assigned in
whole or part by either party without the prior
written approval by the other party; provided that
the Agreement may be assigned, in the case of
corporate reorganization, to an entity controlled by
the assigning party or under common control with the
assigning party.
10.3. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties and is intended
expressly to supercede the letter agreement signed by
the parties on September 1, 1999. In addition, this
Agreement may not be modified except by a subsequent
writing duly executed by all parties.
10.4. GOVERNING LAW. The internal law, without regard to
conflicts of laws principles, of the State of
California will govern all questions concerning the
construction, validity and interpretation of this
Agreement and the performance of the obligations
imposed by this Agreement.
10.5. VENUE AND JURISDICTION. All actions brought against
PLSI under this Agreement, including any of the
actions set forth in paragraph 6 above, may be
brought in the state or federal courts located in the
State of Montana. PLSI hereby irrevocably waives
personal service of process and consents to process
being served in any such suit, action or proceeding
by receiving a copy thereof sent to PLSI at the
address in effect for notices to it in subparagraph
10.1 above and agrees that such service shall
constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be
deemed to limit in any way any right by BSLT to serve
process in any manner permitted by law.
10.6. COUNTERPARTS. This Agreement may be executed in
counterparts with any two counterparts signed by each
party having the full force, effect and authority of
an original document signed by all parties.
10.7. NO WAIVER. No failure or delay by any party in the
exercise of any of its rights hereunder will be
deemed to be a waiver of any of its rights.
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10.8. SEVERANCE. In the event that any provision or
provisions are found by any tribunal of competent
jurisdiction to be null or void, such provisions will
be deemed to be severed from this Agreement and the
remainder of the Agreement will remain in full force
and effect.
10.9. HEADINGS. The headings contained in this Agreement
are for reference only and shall not be used to
resolve any questions of interpretation or
construction.
10.10. RULES OF CONSTRUCTION. All parties have entered into
this Agreement upon the advice of counsel and with
full participation in the drafting of this Agreement.
Accordingly, the parties agree that the principle
that would construe a contract strictly against the
party who drafted such contract shall have no
application to this Agreement.
IN WITNESS WHEREOF, the undersigned officers of the party, having been
duly authorized to bind their respective parties, have executed this Agreement
on behalf of their respective parties as of the date last below written.
BIG SKY LASER INTERNATIONAL, INC. PREMIER LASER SYSTEMS, INC.
By:________________________________ By:_____________________________
Ed Xxxxx Xxxxxxx Cozeen
President President
Dated: Dated:
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