EXHIBIT 10.84
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE ("Agreement") is made as
of March 29, 2002 by and among Sally M. Pollet, an individual ("Pollet"), Pollet
& Richardson, A Law Corporation ("P&R"), the Estate of Andrew F. Pollet,
deceased (the "Probate Estate"), and STAAR Surgical Company, a Delaware
corporation ("STAAR"), all of whom may hereafter be referred to as the
"Parties."
RECITALS
A. Pollet is the widow of Andrew F. Pollet ("Andrew"). Pollet is
also the court-approved administrator of the Probate Estate, now
pending as case no. P075793 before the Superior Court of the
State of California for the County of Ventura. Pollet is also
the mother and custodian of the four (4) minor children of
Pollet and Andrew: Troy Pollet, age 16; Austin Pollet, age 14;
Andrew Pollet II, age 10; and Madison Pollet, age 7,
collectively referred to herein as the "Pollet Children."
B. For some time prior to his death in January 2001, Andrew was an
officer and director of STAAR. In these capacities, Andrew was
granted various options to purchase stock in STAAR. In
connection with the exercise of these options, Andrew executed a
variety of promissory notes in favor of STAAR (the "Stock
Purchase Loans"), executed on: May 26, 1992 for $733,335;
September 4, 1998 for $987,835; August 3, 1999 for $150,000;
September 5, 2000 for $125,000; October 23, 2000 for $465,625;
and November 1, 2000 for $288,000. As of the above date, the
Stock Purchase Loans total $2,749,795 in obligations, plus
interest of $596,551.
C. In order to secure the Stock Purchase Loans, Andrew executed in
favor of STAAR certain stock pledge agreements (currently
involving 94,000 shares of STAAR stock purchased by Andrew) and
both a second-priority and third-priority deed of trust
encumbering Andrew and Pollet's residential property located at
10934 Alto Court, Oak View, California 93022.
D. Prior to his death in January 2001, Andrew, an attorney, was the
holder of an equity interest in P&R (the "Equity Interest").
E. On September 22, 2001, for a variety of reasons, Pollet filed a
voluntary petition under chapter 11 of the Bankruptcy Code, 11
U.S.C. Sections 101 et seq., thereby commencing case no.
ND01-13364RR before the United States Bankruptcy Court for the
Central District of California (the "Bankruptcy Case").
F. Mona Buchanan has submitted a Proof of Claim in the Bankruptcy
Case in the amount of $70,000 (the "Mona Buchanan Claim").
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A dispute has arisen among the Parties regarding the remaining
obligations of Pollet to STAAR with regard to the Stock Purchase Loans, and
regarding the remaining obligations of P&R to Pollet and the Probate Estate with
regard to the Equity Interest. The Parties wish to compromise and forever settle
all disputes among them.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual promises,
covenants and conditions herein contained, the Parties agree as follows:
1. Settlement Terms.
(a) Pollet shall execute, in favor of STAAR, a new
promissory note (the "Settlement Note") in the amount of
$2,189,795. A true and correct copy of the Settlement
Note is attached hereto as Exhibit "1". Subject to
subsection (l) below, all of the Stock Purchase Loans
are hereby expressly cancelled, along with all stock
pledge agreements and real property deeds of trust
executed to secure their repayment. The forgiveness by
STAAR of accrued interest on the Stock Purchase Loans is
in partial consideration for the settlement of this
dispute.
(b) Pollet and STAAR shall execute a new stock pledge
agreement (the "Settlement Pledge Agreement") to
encumber a total of 400,000 shares of STAAR's common
stock currently held by Pollet (and/or the Probate
Estate, if so held at the time of the execution of this
Agreement), which includes the existing 94,000 secured
shares plus an additional 306,000 shares. A true and
correct copy of the Stock Pledge Agreement is attached
hereto as Exhibit "2".
(c) The Settlement Note shall be non-recourse with regard to
Pollet and her assets (and Andrew and his assets and the
Probate Estate and its assets, if any) with the
exception of those assets pledged under the Stock Pledge
Agreement.
(d) Pollet shall waive any and all claims that she, her
bankruptcy estate, Andrew or the Probate Estate may
possess to the Equity Interest and to any consideration
due as a result of such an interest.
(e) P&R shall execute, in favor of STAAR, a promissory note
in the amount of $560,000 (the "P&R Note"). A true and
correct copy of the P&R Note is attached hereto as
Exhibit "3". The P&R Note
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constitutes additional consideration by P&R to Pollet
and/or the Probate Estate, and by Pollet and/or the
Probate Estate to STAAR.
(f) P&R and STAAR shall execute a security agreement (the
"Security Agreement") to encumber P&R's accounts
receivable. A true and correct copy of the Security
Agreement is attached hereto as Exhibit "4". If, at a
future date, P&R obtains a line of credit (not to exceed
$250,000) secured by P&R's accounts receivable, STAAR
agrees to subordinate the Security Agreement (and any
lien arising thereunder) to such a lien securing such a
line of credit.
(g) P&R shall pay to Pollet the sum of $50,000 (the "Pollet
Payment"). A total of $40,000 of the Pollet Payment has
already been paid to Pollet by P&R prior to the
execution of this Agreement as follows: $10,000 on
October 16, 2001, $7,500 on November 15, 2001, $7,500 on
December 17, 2001, $7,500 on February 5, 2002, and
$7,500 on February 26,2002. P&R shall pay the remaining
Pollet Payment by May 30, 2002.
(h) P&R shall henceforth pay all premiums (not including
copayments and other fees) that Pollet incurs with
regard to insurance coverage for Pollet and/or the
Pollet Children (including any insurance covering the
residence of Pollet and/or the Pollet Children). Said
payments shall not exceed the sum of $12,000 in a single
calendar year without the written consent of P&R, and
shall total $120,000.
(i) P&R shall henceforth provide an expense account to
Pollet to pay the expenses of Pollet and/or the Pollet
Children. Said payments shall not exceed the sum of
$30,000 in a single calendar year without the written
consent of P&R, and shall total $300,000.
(j) P&R shall assume any and all liability of the Debtor
with respect to the Mona Buchanan Claim, and will take
all necessary steps to cause the claim to be withdrawn
and dismissed upon approval of this Agreement by the
Bankruptcy Court.
(k) Pollet will use her best efforts, in accord with
relevant law and rules of procedure, to have this
Agreement approved as part of a plan of reorganization
and STAAR and P&R agree to consent to a Plan which
implements this Agreement. Pollet will also use her best
efforts, in accord with relevant law and rules of
procedure, to have this Agreement approved by and/or in
accord with the administration of the Probate Estate.
(l) This Agreement is contingent upon approval by the
Bankruptcy Court within four years from the date hereof.
In the event this
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Agreement is not approved by the Bankruptcy Court within
that time frame, any payments made by P&R to STAAR
pursuant to the P&R Note shall be credited as payments
by P&R to Pollet and by Pollet to STAAR, and the parties
shall otherwise be returned to their respective
positions as if this Agreement and the collateral
documents (i.e., the Settlement Note, the Settlement
Pledge Agreement, the P&R Note, and the Security
Agreement) had not been executed and the Stock Purchase
Loans and all related stock pledge agreements and real
property deeds of trust shall remain in full force and
effect.
(m) Any and all statutes of limitation arising out of either
the Stock Purchase Loans or the Equity Interest shall be
tolled (with respect to claims presented by the Parties
hereto against one or more of the Parties hereto) from
the date of the filing of the petition in Bankruptcy (on
September 22, 2001) through either the approval or
disapproval of this Agreement by the Bankruptcy Court,
or four years from the date hereof, whichever is first.
2. Time of the Essence. Time is of the essence and these settlement
terms shall be executed as provided herein or else this Agreement shall have no
force or effect.
3. Mutual Release. Except for the rights and obligations of the
Parties arising from this Agreement, and subject to section 1.(l) above, the
Parties hereby, for themselves, their employees, agents, partners, members,
representatives, successors and assigns, discharge and release one another,
their past and present employees, agents, executors, administrators, trustees,
heirs, spouses, attorneys, partners, representatives, assigns, predecessors,
successors and related entities (the "Released Parties"), from any and all
claims, damages, actions, judgments, obligations, attorneys' fees, indemnities,
subrogations, duties, demands, controversies and liabilities of every nature at
law or in equity, liquidated or unliquidated, known or unknown, matured or
unmatured, foreseeable or unforeseeable, which they had or have arising out of
either the Stock Purchase Loans or the Equity Interest.
4. Waiver of Unknown Claims. It is understood and agreed that the
Parties' releases set forth hereinabove extend to all claims of every kind,
nature and description whatsoever, known or unknown, suspected or unsuspected,
and any and all rights under the provisions of Section 1542 of the Civil Code of
California or under any comparable statute of any other jurisdiction, arising
out of the Stock Purchase Loans or Equity Interest. The Parties expressly
acknowledge that they are familiar with and expressly waive and relinquish every
right or benefit they have or may have under the provisions of Section 1542 of
the Civil Code of California which reads 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,
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which if known by him must have materially affected his settlement with
the debtor."
5. Entire Agreement. This Agreement contains the sole, complete and
entire agreement and understanding of the Parties concerning the matters
contained herein and may not be altered, modified, or changed in any manner
except by a writing duly executed by the Parties. No Party is relying on any
representations other than those expressly set forth herein. No conditions
precedent to the effectiveness of this Agreement exists, other than as expressly
provided for herein. There are no oral or written collateral agreements. All
prior discussions and negotiations have been and are merged, integrated into and
superseded by this Agreement. By execution hereof, the parties specifically
disavow any desire or intention to create a "third party" beneficiary contract,
and specifically declare that no person or entity, save and except for the
parties and their permitted successors and assigns, shall have any rights
hereunder nor any right of enforcement hereof.
6. Waiver. The delay or failure of a Party to exercise any right,
power or privilege hereunder, or failure to strictly enforce any breach or
default, shall not constitute a waiver with respect thereto; and no waiver of
any such right, power, privilege, breach or default on any one occasion shall
constitute a waiver thereof on a subsequent occasion unless clear and express
notice thereof in writing is provided.
7. Cooperation. Each party agrees, without further consideration,
to cooperate and diligently perform any further acts, deeds and things, and to
execute and deliver any documents, that may be reasonably necessary to
consummate, evidence, confirm and/or carry out the intent and provisions of this
Agreement, all without undue delay or expense.
8. Attorneys' Fees Upon Breach. If any action at law or in equity,
or any motion, is brought to enforce this Agreement, the prevailing Party shall
be entitled to all of its costs in bringing and prosecuting said action or
motion, including reasonable attorneys' fees.
9. Applicable Law. This Agreement shall be construed according to
the laws of the State of California in effect as of the date of execution,
excluding any law relating to the conflict of laws.
10. Advice of Counsel. The Parties represent that prior to the
execution of this Agreement they had the opportunity to seek the benefit of
independent legal counsel of their own selection regarding the substance of this
Agreement. The Parties acknowledge that STAAR is a present client of P&R (with
regard to other matters), but all of the Parties have had the assistance of
counsel other than P&R with regard to this Agreement. This Agreement was
prepared by each party in conjunction with counseling from such party's
respective attorney or the opportunity to obtain such counseling. In light of
these facts it is acknowledged that no party shall be construed to be solely
responsible for the drafting of this Agreement, and therefore any ambiguity
shall not be construed against any party as the alleged draftsman of it. Each
party shall pay all costs and expenses incurred or to be
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incurred by such party in negotiating and preparing this Agreement and in
performing and complying with all representations, warranties, covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by such party, including legal fees.
11. Warranties. The Parties, and each of them, warrant: (i) that no
other person or entity had or has or claims, any interest in any of the claims,
demands, causes of action, or damages covered in this Agreement; (ii) that they,
and each of them, have the sole right and exclusive authority to execute this
Agreement; and (iii) that they have not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation, damage or
liability covered in this Agreement. All of the representations, warranties,
covenants, conditions and provisions of this Agreement shall be binding upon and
shall inure to the benefit of each party and such party's respective heirs,
executors, administrators, legal representatives, successors and/or assigns.
12. Representation of Authority. Each individual executing this
Agreement on behalf of any Party expressly represents and warrants that he/she
has authority to execute and thereby bind the Party on behalf of which he/she
executes this Agreement to the terms of this Agreement and agrees to indemnify
and hold harmless each other party from any claim that such authority did not
exist. Pollet's authority, for the term of the Bankruptcy Case, is subject to
the authority of the Bankruptcy Court, and Pollet pledges to use her best
efforts to swiftly obtain the approval of the Bankruptcy Court (and any other
relevant and required entity) for this Agreement.
13. Headings. The headings included in this Agreement are for
convenience only and do not limit, alter, or affect the matters contained in
this Agreement or the paragraphs they encaption. References to this Agreement
shall include all amendments thereto. As used in this Agreement, each gender
shall be deemed to include each other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together constitute one single document.
15. Telefacsimile Signatures. This Agreement and any documents
relating to it may be executed and transmitted to any other party by
telefacsimile, which telefacsimile shall be deemed to be, and utilized in all
respects as, an original, wet-inked document.
16. Date of Execution. The Parties execute this Agreement as of the
date first above set forth.
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SALLY M. POLLET
By: /s/ Sally M. Pollet Date: 4/4/02
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Sally M. Pollet, an individual, and as
personal representative of the Estate of
Andrew F. Pollet, deceased
STAAR SURGICAL COMPANY
a Delaware corporation
By: /s/ John Bily Date: 4/4/2002
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John Bily, Chief Financial Officer
POLLET & RICHARDSON,
A Law Corporation
By: /s/ Erick Richardson Date: 4/4/02
--------------------
Erick Richardson, President
CONSENT OF MONA BUCHANAN:
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I consent to releasing my claim against Pollet (the "Mona Buchanan Claim")
pursuant to the terms set forth above.
By: /s/ Mona Buchanan Date: 4/3/02
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Mona Buchanan
APPROVED AS TO FORM:
MICHAELSON, SUSI & MICHAELSON
A Professional Corporation
By: /s/ Peter Susi Date: 4/4/02
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Peter Susi, Esq., Attorneys for
Sally M. Pollet
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SHEPPARD MULLIN RICHTER
& HAMPTON LLP
By: /s/ Peter M. Menard Date: 4-11-02
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Peter Menard, Esq., Attorneys for
STAAR Surgical Company
LAW OFFICES OF NORDMAN,
CORMANY, HAIR & COMPTON
By: /s/ Janet Anne Reese Date: 4-10-02
--------------------
Janet Reese, Esq., Attorneys for the
Estate of Andrew F. Pollet
POLLET & RICHARDSON,
A Law Corporation
By: Addison Adams Date: 4-3-02
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Addison Adams, Esq., Pro Se
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