SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT is entered into this 9th day of June 2000
by and between BLA INVESTMENT IRREVOCABLE TRUST by and through Xxxxx Xxxxxx and
Xxxx Xxxxxx, Trustees (the "BLA TRUST"), XXXXX XXXXXX, an individual, XXXX
H1GLEY, an individual, XXXXXX XXXXXX, an individual, MINING SERVICES
INTERNATIONAL CORPORATION, a Utah corporation ("MSI"), XXXX X. DAY, an
individual, XXX XXX, an individual, XXXXXX X. XXXX, an individual, and Xxxxxxx
XXXXXXXXX, an individual (MSI, DAY, XXX, XXXX and XXXXXXXXX are sometimes
collectively referred to herein as "DEFENDANTS').
RECITALS
A. By a Voting Agreement, dated August 27, 1997 (the "Voting
Agreement"), between MSI, Xxxxxx Xxxxxx Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxx
Xxxxxx shares of MSI held by them became subject to certain restrictions
limiting how the shares may be voted.
B. By a Stock Transfer Agreement effective as of April 12, 1999, Xxxxxx
Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx transferred certain MSI shares to the BLA
TRUST.
C. At the annual shareholders meeting of MSI, held on May 19, 1999, MSI
refused to allow the BLA TRUST to vote the MSI shares it held outside of the
restrictions imposed by the Voting Agreement.
D. On or about January 20, 2000, the BLA TRUST filed an action against
DEFENDANTS styled BLA Investment Irrevocable Trust v. Mining Services
International Corp.,et al, Civ. No. 000900512 (Third Judicial District Court in
and for Salt Lake County, Utah) (the "Action"), alleging that the DEFENDANTS
acted wrongfully by refusing to allow the BLA TRUST to vote its shares outside
of the restrictions imposed by the Voting Agreement, seeking declaratory relief
as to the correct application of the Voting Agreement, and alleging other acts
of wrongdoing.
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E. The DEFENDANTS have generally denied the allegations of the
Complaint and have denied any acts of wrongdoing.
F. The parties recognize that significant additional expense and time
would be incurred to resolve the dispute between them by continuing with the
Action, that continued prosecution of the litigation may have significant
adverse effects upon all parties, and that cooperation and joint participation
in addressing the issues facing MSI would be in the best interests of the
corporation and its shareholders; for these and other reasons the parties desire
now to resolve the dispute between them as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the BLA TRUST, XXXXX XXXXXX, XXXX XXXXXX, XXXXXX
XXXXXX, MSI, DAY, UDY, WADE, and XXXXXXXXX agree as follows:
1. Board Vacancy. At a board meeting to be held on or before June 30,
2000 (the "June Board Meeting"), the MSI Board of Directors (the "MSI Board")
will adopt a resolution to accept the resignation of Xxx Xxx and Xxxxxxx
Xxxxxxxxx from the MSI Board and to appoint Xxxxx Xxxxxx and Xxxx Xxxxx to fill
the vacant positions. The resignation of Xxx Xxx and Xxxxxxx Xxxxxxxxx shall
become effective immediately upon the acceptance by Xxxxx Xxxxxx and Xxxx Xxxxx
of the new board positions.
2. Board Slate of Directors. At the June Board Meeting, the MSI Board
will also nominate the seven members of the Board as then constituted, including
Xxxxx Xxxxxx and Xxxx Xxxxx, to be the slate of proposed directors to be elected
at the next annual shareholders meeting. Xxxxx Xxxxxx and Xxxx Xxxxx will
receive the same compensation package as received by the independent members of
the MSI Board.
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3. Annual Shareholders Meeting. The annual shareholders meeting shall
be noticed and held as soon after the June Board Meeting as is practicable in
compliance with the governing laws and regulations to elect the seven member
board nominated by the MSI Board. Proxy materials to be sent to shareholders
will be prepared listing the slate of directors and approval of the auditor as
the only agenda items, subject to the duty of the MSI Board in fulfilling its
fiduciary duty to submit matters to the MSI shareholders to address now
unforeseen changes in circumstances that require shareholder action.
4. Rights Agreement. At a Board meeting held June 5, 2000, the MSI
Board adopted a resolution rescinding, withdrawing and agreeing to redeem the
Rights Agreement, dated as of May 19, 1999 between MSI and Zions First National
Bank, Rights Agent.
5. Dismissal and Stay of Action. Immediately following the June Board
Meeting, the parties will cause their counsel to present jointly to the Court a
stipulation and motion (a) dismissing with prejudice all claims against MSI,
except for the claim for declaratory relief, (b) dismissing with prejudice all
claims against Xxx Xxx and Xxxxxxx Xxxxxxxxx, (c) dismissing with prejudice all
claims against Xxxx X. Day and Xxxxxx X. Xxxx, except for claims reserved in
paragraphs 13 hereof, and (d) staying the Action until such time that NASDAQ has
acted on the joint request of MSI and the BLA TRUST that NASDAQ recognizes that
MSI shares held by the BLA TRUST are no longer subject to the restrictions of
the Voting Agreement. To the extent required by the Court and applicable federal
and state securities law, MSI will provide notice to shareholders of the
settlement terms upon which dismissal is based. The Parties agree and stipulate
that the BLA Trust shall prepare an amended complaint in the Action which shall
reflect the procedural posture of the case in light of the dismissal of those
certain claims and parties as set forth herein. This amended complaint shall be
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filed with the dismissal which is the subject of this section. The parties
stipulate to the amendment, subject to the approval of the Court. This
stipulation shall not act as a waiver as to any claim or defense available
regarding the subject matter of the amended complaint.
6. Final Dismissal. Upon NASDAQ's recognition that MSI shares held by
the BLA TRUST are no longer subject to the restrictions of the Voting Agreement,
the BLA TRUST will cause all remaining causes of action to be dismissed with
prejudice and all claims against any DEFENDANTS which have been reserved
hereunder will be released in full. Should NASDAQ find that the BLA TRUST is
subject to the restrictions of the Voting Agreement, the stay of the Action will
end upon written notice to the Court and to all DEFENDANTS; BLA TRUST may at
that time proceed with the remaining causes of action and the MSI Board will be
free to adopt what ever resolutions on the subject of the Voting Agreement it
deems to be in the best interests of MSI and its shareholders, including a
resolution that, in light of NASDAQ's actions, the restrictions of Voting
Agreement will thereafter be applied to shares held by the BLA TRUST.
7. BLA Litigation Expenses. Within five days of the Court order being
issued dismissing and staying the Action as required by Paragraph 5 above, MSI
shall deliver to counsel for the BLA TRUST a check in the amount of $20,000 as
reimbursement of part of the litigation expense the BLA TRUST has incurred in
the Action.
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8. Trust Changes. Upon election of the proposed slate of seven
directors and to become effective at the conclusion of the annual MSI
shareholders meeting, the BLA TRUST with the written consent of the now existing
beneficiaries, will cause changes to be made to the BLA Trust which will provide
that, subject to the requirements of any applicable rule against perpetuities,
for a period running until the later of that date upon which the BLA Trust no
longer holds MSI stock in an amount greater than five percent (5%) of the
outstanding shares of MSI or that date when the principal amount of the
Promissory Note owed to Dal and Xxxxxxx Xxxxxx has been paid in full, the BLA
Trust may not terminate or otherwise make distributions of MSI stock to the
Beneficiaries, except in amounts which, in aggregate, do not exceed five percent
(5%) of the outstanding shares of MSI. The changes to the BLA Trust shall not
preclude the BLA Trust or any Beneficiary of the BLA Trust from selling shares
of stock of MSI in the market, subject to applicable securities restrictions.
9. Voting Agreement. Immediately following the annual shareholders
meeting and the election of the slate of directors proposed by the MSI Board,
and subject to the BLA TRUST having made the changes required by paragraph 8
hereof, the newly elected MSI Board will adopt a resolution that in light of the
changes made to the BLA TRUST and in light of additional information, the MSI
Board has concluded that the shares of MSI stock held by the BLA TRUST are no
longer subject to the restrictions imposed by the Voting Agreement.
10. NASDAQ. Within a reasonable time, but no longer than 90 days
following the MSI annual shareholders meeting, representatives of MSI to be
selected by the MSI Board, together with representatives of the BLA TRUST, will
present to NASDAQ the resolution that MSI has concluded that the BLA TRUST is no
longer subject to the restrictions of the Voting Agreement and reasons to
support that resolution in a good faith effort to convince NASDAQ to accept the
action by the MSI Board. It is the intent of the parties to use all reasonable
efforts at NASDAQ to obtain a ruling favorable to the BLA TRUST, including if
necessary pursuing formal NASDAQ hearings.
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11. Release of MSI. The BLA Trust hereby forever releases. discharges,
and acquits MSI, including its non-DEFENDANT directors, officers, agents,
counsel, insurers, sureties, successors and assigns, but excepting the DEFENDANT
directors and officers other than as released in Paragraph 13 hereof, from any
and all claims, liabilities, causes of action, damages, costs, losses and
expenses that arise from or relate to allegations set forth in the Action,
except with respect to claims arising out of or relating to any breach of this
Settlement Agreement and the claims reserved and stayed for declaratory relief.
12. Release of Xxx and Xxxxxxxxx Without Reservation. The BLA Trust
hereby forever releases, discharges, and acquits Xxx Xxx and Xxxxxxx Xxxxxxxxx,
including their agents, counsel, insurers, sureties, successors and assigns from
any and all claims, liabilities, causes of action, damages, costs, losses and
expenses that arise from or relate to allegations set for~ in the Action, except
with respect to claims arising out of or relating to any breach of this
Settlement Agreement.
13. Release of Remaining Individual DEFENDANTS. The BLA Trust hereby
forever releases, discharges, and acquits DAY and XXXX, and each of them
separately and individually, as well as collectively, including their agents,
counsel, insurers, sureties, successors and assigns from any and all claims,
liabilities, causes of action, damages, costs, losses and expenses that arise
from or relate to allegations set forth in the Action, except for and expressly
reserving claims arising out of or relating to any breach of this Settlement
Agreement, claims reserved and stayed for declaratory relief, and claims the BLA
TRUST may have arising solely from and limited to their applying the
restrictions of the Voting Agreement to MSI shares held and attempted to be
voted by the BLA TRUST at the annual shareholders meeting held on May 19, 1999.
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14. Release of BLA Trust. MSI, XXX and XXXXXXXXX hereby forever
release, discharge, and acquit the BLA TRUST including its Trustees and
Beneficiaries agents, counsel, insurers, sureties, successors and assigns from
any and all claims, liabilities, causes of action, damages, costs, losses and
expenses that arise from or relate to the facts alleged in the Action, except
with respect to claims arising out of or relating to any breach of this
Settlement Agreement and the claims reserved and stayed for declaratory relief.
15. No Assignment of Claims. Each party hereby warrants and represents
that no action, cause of action, claim or demand hereby released by such party
l, or any interest therein, has been assigned to a third party.
16. Signers Duly Authorized. The signatories to this Agreement, and
each of them, hereby warrant that they are duly authorized to enter into this
Agreement on behalf of the entities on whose behalf they purport to act.
17. Opportunity for Review. It is hereby expressly understood and
agreed that this Agreement has been freely and voluntarily entered into by the
parties, and that the parties have had the opportunity to consult with their
respective counsel regarding this Agreement.
18. Entire Agreement. This Settlement Agreement constitutes the entire
agreement of the parties with respect to subject matter hereof and replaces all
prior negotiations, understandings, or agreements, should any party claim such
existed, related to the claims resolved by this Settlement Agreement.
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19. Executed in Counterparts. This Agreement may be executed in
counterparts, each of which when executed and delivered shall be an original,
but all counterparts shall constitute the same instrument. Any document executed
by a party hereto and thereafter conveyed to the other party in facsimile form
shall be considered an original document, signed in counterpart.
20. Reasonable Legal Fees for Enforcement. In the event of a default or
breach of this Settlement Agreement by any party hereto, the defaulting or
breaching party shall pay all reasonable legal fees, costs and expenses incurred
by the non-defaulting party in enforcing this Settlement Agreement. Each party
will, however, bear their own costs and attorney fees incurred in connection
with this matter through the date of the execution of this Settlement Agreement.
21. Governing Law. This Settlement Agreement shall be governed by the
law of the State of Utah.
EXECUTED as of this _________ day of June, 2000
THE BLA INVESTMENT IRREVOCABLE TRUST
By: ______/s/_____________________________
Xxxxx Xxxxxx, Trustee
By: ______/s/_____________________________
Xxxx Xxxxxx, Trustee
__________/s/_____________________________
XXXXX XXXXXX, Individually And as
Beneficiary of The BLA TRUST
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__________/s/_____________________________
XXXX XXXXXX, Individually And as
Beneficiary of The BLA TRUST
__________/s/_____________________________
XXXXXX XXXXXX, Individually And as
Beneficiary of The BLA TRUST
MINING SERVICES INTERNATION
CORPORATION
By: Xxxx X. Day
It's: President
__________/s/_____________________________
XXXX X. DAY, Individually
__________/s/_____________________________
XXX XXX, Individually
__________/s/_____________________________
XXXXXX X. XXXX, Individually
__________/s/_____________________________
XXXXXXX XXXXXXXXX, Individually
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