Exhibit 10.1

 

CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE

 

This Confidential Settlement Agreement and Mutual Release (this “Agreement”), is
made July 10, 2014 (the “Effective Date”), between Cyalume Technologies, Inc.,
(“Cyalume”) and Cyalume on behalf of Emil Jachmann (“Jachmann”), in the first
instance, and Omniglow LLC, (“OmniGlow”), Randye M. Holland and Stanley M.
Holland as Trustees of the Randye M. Holland and Stanley M. Holland Trust and
the Leemon Family LLC, in the second instance, (individually sometimes referred
to as a “Party” and collectively as the “Parties”).

 

RECITALS

 

A. WHEREAS, on January 23, 2006, Cyalume and OmniGlow entered into various
written agreements. Subsequently, disputes arose between the Parties and
lawsuits were filed.

 

B. WHEREAS, on or about June 29, 2006, OmniGlow, Randye M. Holland and Stanley
M. Holland as Trustees of the Randye M. Holland and Stanley M. Holland Trust,
the Leemon Family LLC, and Achaian, Inc. filed Civil Action No. 06-706 in the
Superior Court of Hampden County, Massachusetts alleging that Cyalume and
Jachmann breached agreements and engaged in conduct which caused damage to
OmniGlow. Subsequently, Cyalume and Jachmann filed their Answer With
Counterclaims denying the Hampden Superior Court civil action allegations and
alleging that OmniGlow breached agreements and engaged in conduct which caused
damage to Cyalume.

 

C. WHEREAS, on or about October 5, 2006, Cyalume filed Civil Action No.
603512/06 in the New York Supreme Court of New York County alleging, among other
things, that OmniGlow and its officers, including Ira Leemon and Stanley
Holland, breached agreements which caused damage to Cyalume. Subsequently, on
Motion by OmniGlow, that civil action was stayed pending the outcome of Hampden
Superior Court Civil Action No. 06-706 in Massachusetts.

 

 

 

 

D. WHEREAS, on July 12, 2012, an Amended Final Judgment was filed in Hampden
Superior Court Civil Action No. 06-706 awarding damages to OmniGlow including
attorneys’ fees, costs, and prejudgment interest (“Amended Final Judgment”).

 

E. WHEREAS, on or about October 17, 2012, Cyalume, on its and Jachmann’s behalf,
filed Defendants’ Notice of Appeal from Hampden Superior Court Civil Action No.
06-706 in the Massachusetts Appeals Court, which assigned the Docket No.
2013-P-0280.

 

F. WHEREAS, on May 14, 2014, the Appeals Court issued its decision in case No.
2013-P-0280, which upheld the July 12, 2012 Amended Final Judgment.

 

G. WHEREAS, on July 1, 2014, Cyalume, on its and Jachmann’s behalf, filed an
Application For Further Appellate Review in the Massachusetts Supreme Judicial
Court, which application is still pending as Docket No. FAR-22600.

 

H. WHEREAS, the Parties have reached an agreement and wish to settle, compromise
and resolve, throughout the universe and in perpetuity, all claims past and
present, under the laws of any territory, country or jurisdiction, based on or
related to Hampden Superior Court Civil Action No. 06-706, New York Supreme
Court Civil Action No. 603512/06, Massachusetts Appeals Court Docket No.
2013-P-0280, and Massachusetts Supreme Judicial Court Docket No. FAR 22600
(collectively hereafter the “Civil Claims”), each Party to bear its own
attorneys’ fees and costs.

 

In consideration of the Recitals, the mutual covenants and agreements set forth
herein, and other good and valuable consideration, the sufficiency and receipt
of which they hereby acknowledge, the Parties agree as follows:

 

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1. Recitals. The foregoing Recitals are incorporated into and form a part of
this Settlement Agreement.

 

2. No Admissions. This Settlement Agreement is entered into for the purposes of
settling disputes between the Parties. Nothing contained in this Settlement
Agreement shall be considered an admission of wrongdoing or liability by either
party of any kind or nature whatsoever. Each party specifically denies
wrongdoing.

 

3. Settlement Payment. Cyalume shall either:

 

a. pay the settlement amount of $4,547,851.47 (“Settlement Amount”); OR

 

b. make an initial good faith payment of $250,000 to OmniGlow on July 10, 2014,
by wire transfer to: “CitiBank, Acct. No. 35354087, ABA No. 021000089.” Within
21 days from the execution of this Agreement, Cyalume shall make an additional
down payment of One Million Dollars ($1,000,000.00) payable Six Hundred
Twenty-five Thousand Dollars ($625,000.00) to Stanley Holland by wire transfer
to “Wells Fargo, Acct. No. 0264433509, ABA No. 121000248” and Three Hundred
Seventy-five Thousand Dollars ($375,000.00) to OmniGlow by wire transfer. In
addition, within 14 days from the execution of this Agreement, Cyalume shall
transfer 625,139 shares of Cyalume stock, one-half to Holland and one-half to
OmniGlow. Further, Cyalume may fully satisfy the remaining balance due on the
Settlement Amount by either making additional payments by cash and/or through
cooperative manufacturing credits of (i) One Million Nine Hundred Thousand
Dollars ($1,900,000.00) in cash or credits if paid and received by OmniGlow
within eighteen (18) months from the Effective Date of this Agreement, or (ii)
Two Million Three Hundred Fifty Thousand Dollars ($2,350,000.00) in cash or
credits if paid and received by OmniGlow within twenty seven (27) months from
the Effective Date of this Agreement. If Cyalume fails to fully satisfy the
payment obligation on the Settlement Amount through 2(b)(i) or 2(b)(ii), then
after twenty seven (27) months from the Effective Date, any balance remaining
from the Settlement Amount will be due and payable plus accrued interest at
simple interest rate of 10% per annum (“Interest Rate”) on the unpaid balance
(Settlement Amount less all payments made from the Effective Date forward) from
the Effective Date until paid in full and OmniGlow can use all available
remedies to obtain payment of any balance. In order to avoid any confusion
regarding the interest calculation described in the preceding sentence, an
example is provided as follows for illustration purposes only: From the
Effective Date, the remaining balance would be $4,297,851.47, reflecting
$250,000 good faith payment to OmniGlow. This remaining balance will accrue
interest at the Interest Rate until next payment. Upon payment of an additional
$1,000,000 by Cyalume, the remaining balance will be reduced to $3,297,851.47
and this remaining balance will accrue interest at the Interest Rate from the
date of the $1,000,000 payment until further payments and so and so forth until
the Settlement Amount is fully satisfied through the payment options included
herein.

 

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4. Standstill and Stay of Enforcement of Amended Final Judgment. So long as
Cyalume is in compliance with its obligations in this Agreement and not
otherwise in breach of this Agreement, OmniGlow, Randye M. Holland and Stanley
M. Holland as Trustees of the Randye M. Holland and Stanley M. Holland Trust and
the Leemon Family LLC shall take no action in connection with the Amended Final
Judgment unless and until Cyalume files a petition in bankruptcy; or Cyalume
makes an assignment for the benefit of creditors; or a court appoints a
receiver, custodian or trustee for Cyalume or its assets; or an actual petition
in bankruptcy is commenced; or Cyalume files for dissolution or a court
dissolves Cyalume; or Cyalume completely or substantially ceases operations; or
Cyalume Defaults on any substantial bank loan or line of credit that is not
cured or waived or otherwise becomes subject to forbearance within 90 days.
OmniGlow, Randye M. Holland and Stanley M. Holland as Trustees of the Randye M.
Holland and Stanley M. Holland Trust, and the Leemon Family LLC further agree to
stay any and all proceedings concerning the Civil Claims and Amended Final
Judgment. To the extent any Court(s) require(s) filings codifying the standstill
and/or stay agreements contemplated by this paragraph, the Parties shall file
same jointly.

 

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5. Satisfaction of Amended Final Judgment. Within three (3) business days of
Cyalume’s satisfaction of paragraph 3 above, OmniGlow, Randye M. Holland and
Stanley M. Holland as Trustees of the Randye M. Holland and Stanley M. Holland
Trust and the Leemon Family LLC, and Achaian, Inc. shall file with the Hampden
Superior Court, a document indicating that Cyalume and Jachmann have satisfied
the amounts due under the Amended Final Judgment in full.

 

6. Cooperative Agreements.

 

a. OmniGlow and Cyalume acknowledge and agree that cooperative agreements may be
mutually beneficial. OmniGlow and Cyalume will endeavor to enter into a
cooperative manufacturing and chemical supply agreement at mutually agreeable
terms.

 

b. If both OmniGlow and Cyalume are able to identify and mutually agree upon
realizable cost savings (“Cost Savings”), OmniGlow and Cyalume will endeavor to
enter into one or more cooperative manufacturing agreements, subject to mutual
agreement on terms by the Parties. Cost Savings is defined as Cyalume’s all-in
manufacturing cost per product less OmniGlow’s comparable manufacturing cost.
The products to be chosen for the cooperative manufacturing will be at Cyalume’s
sole discretion. If OmniGlow and Cyalume mutually agree to proceed with one or
more cooperative manufacturing agreements, then the Cost Savings will be shared
between the Parties as follows: (i) 80/20 for OmniGlow and Cyalume,
respectively, until OmniGlow receives what it is owed in Section 3 above, and
(ii) 50/50 for OmniGlow and Cyalume, respectively, thereafter. The initial term
for the cooperative agreements between the parties will be 3 years with any
extension to be mutually agreed upon in writing prior to the expiration of three
(3) years.

 

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c. If both OmniGlow and Cyalume are able to identify and mutually agree upon
chemistry that Cyalume has available or can supply to OmniGlow, Cyalume and
OmniGlow will endeavor to enter into a chemical supply agreement at mutually
agreeable terms.

 

d. In the event that OmniGlow and Cyalume are not able to reach a mutual
agreement contemplated by this paragraph, neither party will be subject to any
liability from any failure to reach a mutually satisfactory cooperative
agreements.

 

7. Non-Competition.

 

a. All existing non-compete agreements that Cyalume and all its affiliates and
subsidiaries are currently bound to will be terminated.

 

b. If Cyalume and OmniGlow are able to reach a mutual cooperative agreements for
the manufacturing of products and supply of chemistry, then Cyalume and OmniGlow
will endeavor to agree upon a reasonable non-competition agreement

 

c. In the event that OmniGlow and Cyalume are not able to reach a mutually
agreeable non-competition agreement contemplated by this paragraph, neither
party will be subject to any liability from any failure to reach such agreement.

 

8. Settlement and Release of Civil Claims.

 

a. Upon receipt of the full amount due under paragraph 3 above, OmniGlow, Randye
M. Holland and Stanley M. Holland as Trustees of the Randye M. Holland and
Stanley M. Holland Trust and the Leemon Family LLC and their respective
successors and assigns, officers, directors, members, stockholders, partners,
agents, servants, employees, insurers, attorneys and representatives release,
acquit and forever discharge Cyalume and all of its successors and assigns,
officers, directors, members, stockholders, partners, agents, servants,
employees, insurers, attorneys and representatives from any and all disputes,
damages, actions, liabilities, attorneys’ fees, costs, demands and any other
claims, including the Civil Claims, known or unknown, suspected or unsuspected,
arising out of, relating to or in any way connected with the Civil Claims and
Amended Final Judgment (collectively, the “Cyalume Released Claims”), but not
the obligations in or arising from this Agreement.

 

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b. Upon execution of this Agreement, Cyalume and its successors and assigns,
officers, directors, members, stockholders, partners, agents, servants,
employees, insurers, attorneys and representatives release, acquit and forever
discharge OmniGlow, Randye M. Holland and Stanley M. Holland as Trustees of the
Randye M. Holland and Stanley M. Holland Trust, and the Leemon Family LLC and
all of their respective successors and assigns, officers, directors, members,
stockholders, partners, agents, servants, employees, insurers, attorneys, and
representatives from any and all disputes, damages, actions, liabilities,
attorneys’ fees, costs, demands and any other claims, including the Civil
Claims, known or unknown, suspected or unsuspected, arising out of, relating to
or in any way connected with the Civil Claims (collectively, the “Omniglow
Released Claims”), but not the obligations in or arising from this Agreement.
Further, this provision has no impact on claims made by Cyalume in New York
Supreme Court Civil Action No. 603512/06 against any defendants (other than
OmniGlow, Ira Leemon and Stanley Holland). Cyalume’s claims in that suit against
the defendants (other than OmniGlow, Ira Leemon and Stanley Holland). survive
this Agreement.

 

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9.Ira Leemon’s Indemnification of Cyalume and Jachmann.

 

Ira Leemon agrees to hold harmless and indemnify Cyalume and Jachmann of and
from any claims, demands, disputes, suits and / or causes of action asserted by
Achaian against them, and any related costs (including their attorneys’ fees and
action / litigation related expenses), damages and / or other liabilities.

10.Representations and Warranties of Cyalume.

 

As of the Effective Date, Cyalume represents and warrants to OmniGlow, Randye M.
Holland and Stanley M. Holland as Trustees of the Randye M. Holland and Stanley
M. Holland Trust and the Leemon Family LLC that:

 

a. Cyalume has full power, authority and capacity to execute and deliver this
Agreement (including on behalf of Jachmann) and consummate the transactions
contemplated by this Agreement;

 

b. when duly executed and delivered, this Agreement shall constitute the legal,
valid and binding obligation of Cyalume and shall be enforceable against Cyalume
in accordance with its terms;

 

c. the execution and delivery of this Agreement by Cyalume does not, and the
consummation of the transactions contemplated hereby will not constitute a
default under or a violation or breach of, or result in the acceleration of any
obligation under, any provision of any contract or other instrument to which
Cyalume is a party;

 

Cyalume has not created or permitted any security interest to exist in
connection with the OmniGlow Released Claims (as defined in paragraph 8 above)
including the Civil Claims, has not sold or transferred the OmniGlow Released
Claims including the Civil Claims, has not mortgaged, pledged, or otherwise
encumbered the OmniGlow Released Claims including the Civil Claims, and has the
sole and absolute right to release, extinguish and discharge the OmniGlow
Released Claims including the Civil Claims, and will not file any application,
petition, appeal or take any action to amend, modify, or discharge the Amend
Final Judgment (other than those appellate filings already a matter or record).

 

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11.Representations and Warranties of OmniGlow, Randye M. Holland and Stanley M.
Holland as Trustees of the Randye M. Holland and Stanley M. Holland Trust, the
Leemon Family LLC, and Achaian, Inc.

 

As of the Effective Date, OmniGlow, Randye M. Holland and Stanley M. Holland as
Trustees of the Randye M. Holland and Stanley M. Holland Trust and the Leemon
Family LLC represent and warrant to Cyalume and Jachmann that:

 

a. They have full power, authority and capacity to execute and deliver this
Agreement and consummate the transactions contemplated by this Agreement;

 

b. when duly executed and delivered, this Agreement shall constitute the legal,
valid and binding obligation of each of them and shall be enforceable against
each of them in accordance with its terms;

 

c. the execution and delivery of this Agreement by them does not, and the
consummation of the transactions contemplated hereby will not constitute a
default under or a violation or breach of, or result in the acceleration of any
obligation under, any provision of any contract or other instrument to which
they are a party;

 

d. they have not created or permitted any security interest to exist in
connection with the Cyalume Released Claims (as defined in paragraph 8 above)
including the Civil Claims and the Amended Final Judgment, have not sold or
transferred the Cyalume Released Claims including the Civil Claims and the
Amended Final Judgment, have not mortgaged, pledged, or otherwise encumbered the
Cyalume Released Claims including the Civil Claims and the Amended Final
Judgment, and have the sole and absolute right to release, extinguish and
discharge the Cyalume Released Claims including the Civil Claims and Amended
Final Judgment.

 

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12. No Inducement. None of the Parties, nor any of their respective attorneys,
officers, agents, directors, or employees, or any of them, has made any promise,
representation, or warranty whatsoever, express or implied, to induce any other
Party to execute this Agreement, and the Parties acknowledge that they have not
executed this Agreement in reliance upon any promise, representation or warranty
other than those which appear in this instrument. Without limiting the
foregoing, no representation or warranty, express or implied, is made by Cyalume
or OmniGlow regarding the tax consequences of this Agreement. Cyalume and
OmniGlow each expressly acknowledges that it is solely responsible for any tax
payment obligations resulting from payments under paragraph 3 above, any
additional interest or late payment charges, and/or this Agreement.

 

13. Confidentiality. The Parties and their employees, agents, boards / board
members and attorneys agree that this Agreement and its terms are and shall be
kept confidential by the Parties and their employees, agents, boards / board
members and attorneys. Except as set forth above; and except to the extent
reasonably necessary to enforce the Agreement; or to the extent that either of
the Parties reasonably believes it is required by law to disclose certain of the
terms of this Agreement; or to the extent that either of the Parties is required
to disclose the terms of its individual settlement to the taxing authorities,
preparers or others with respect to tax matters; or to the extent required by
subpoena or other order of a court or government body of competent jurisdiction,
the terms and conditions of this Agreement, including the amounts of payment,
shall remain confidential and shall not be disclosed. To the extent required by
subpoena or other written order, rule, or regulation of a court or government
body of competent jurisdiction, the party being compelled to provide the
information will notify the other party via their counsel of record within five
(5) business days of receipt of the subpoena or written order.

 

14. Non-Disparagement. The Parties agree that none of them will make nor cause
to be made any statements that disparage, defame or intentionally damage the
reputation of each other (or any members, managers, officers, directors,
employees, agents, representatives, predecessors and successors in interests,
stockholders, investors, affiliates, parents, subsidiaries, servants, boards /
board members or attorneys of the other, where applicable).

 

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15. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the Parties concerning the subject matter hereof and
supersedes any and all prior or contemporaneous agreements, understandings or
negotiations, whether written or oral, between the Parties that refer or relate
to this Agreement. This Agreement can be modified only in a writing executed by
the Parties that expressly states that it is a modification of this Agreement.
No provision hereof may be waived unless in writing and signed by the Party
whose rights are thereby waived. Waiver of one provision hereof shall not be
deemed to be a waiver of any other provision hereof.

 

16. Binding on Successors and Others. This Agreement is and shall be binding
upon and inure to the benefit of the Parties hereto and their respective
officers, directors, shareholders, members, divisions, parent companies,
subsidiary companies, affiliated companies, agents, employees, representatives,
attorneys, relatives, spouses, beneficiaries, heirs, executors, administrators,
assigns, predecessors in interest, successors in interest and all other persons
and entities released hereunder.

 

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17. Attorneys’ Fees. Each Party to this Agreement shall be responsible for its
own attorneys’ fees and costs incurred in connection with Hampden Superior Court
Civil Action No. 06-706, New York Supreme Court Civil Action No. 603512/06,
Massachusetts Appeals Court Docket No. 2013-P-0280 and Massachusetts Supreme
Judicial Court Docket No. FAR 22600, including without limitation, the
negotiation and execution of this Agreement.

 

18. Governing Law and Forum. This Agreement and the obligations and rights of
the Parties hereunder shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts (regardless of any conflict of
laws principles). Subject to the applicable law, the Parties agree that a final
determination/ruling in any JAMS arbitration (as provided for in paragraph 26)
arising out of or relating to this Agreement shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the final determination/ruling, a certified copy of which final
determination/ruling shall be conclusive evidence thereof and the amount of its
indebtedness, or by such other means provided by law.

 

19. Tax Consequences; No Representations or Warranties. The Parties each
acknowledges and agrees that it shall separately be responsible for any tax
obligations or consequences resulting from the terms or enforcement of the terms
of this Agreement. The Parties acknowledge and agree that they have not made any
representations or warranties concerning the tax obligations or consequences
arising out of this Agreement and that there are no representations or
warranties of any kind concerning the tax obligations or consequences arising
out of this Agreement.

 

20. Independent Advice of Counsel. The Parties each represents that it has
carefully read this Agreement, knows its contents, and understands that its
terms are contractual and not mere recitals. The Parties further represent that
each has had the advice of counsel of its choosing and has signed this Agreement
freely and voluntarily; and has not been influenced to any extent whatsoever in
doing so by any representations, statements or promises made other than as set
forth in this Agreement.

 

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21. Construction and Interpretation. The headings of the paragraphs of this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement or any provision hereof. The use of the
neuter form herein shall be deemed to include the masculine and feminine forms,
as the context may require. The terms “and,” “or” and “and/or” shall be
construed conjunctively, disjunctively, or both, as necessary to give the
provisions of this Agreement their broadest and most inclusive scope. The
Parties acknowledge, warrant and represent that the Parties and their counsel
have each participated in the drafting of this Agreement and each provision
hereof, that the Agreement shall be construed as a whole according to its fair
meaning, and that the Agreement shall not be construed or interpreted against
any Party because a provision or the Agreement as a whole was purportedly
prepared, drafted or requested by such party.

 

22. Implementation. The Parties agree to execute such other documents, if any,
and to provide reasonable cooperation as necessary to carry out the intent of
this Agreement. Each Party hereto agrees that such party will not take any
action which would interfere with the performance of this Agreement by any other
Party hereto or which would adversely affect any of the rights or benefits
provided herein.

 

23. Authority. Each individual signing this Agreement warrants and represents
that he or she has full right, power, legal capacity and authority to execute
this Agreement on behalf of the Party on whose behalf he or she so signs, that
he or she is acting within the scope of such authority with the full knowledge
and consent of such Party, and that no further approval or consent of any
person, board of directors, partner or other entity is necessary for him or her
to execute this Agreement and bind the Party to the terms of the Agreement.

 

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24. Counterparts. This Agreement may be executed in one or more counterparts
(including multiple signature pages), each of which shall be deemed an original
and all of which shall be deemed one instrument. Facsimile and photocopy
signatures shall be binding and effective and shall have the same force and
effect as original signatures. True and correct copies may be used in lieu of
the original.

 

25. Fees and Costs of Enforcement. Should any Party retain an attorney for the
purpose of enforcing or construing this Agreement, in any JAMS arbitration,
enforcement proceeding or legal proceeding whatsoever, that Party shall be
entitled to receive from the non-prevailing Party reimbursement for all
reasonable attorneys’ fees and all reasonable costs, including but not limited
to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and reimbursement for all reasonable
attorneys’ fees and all reasonable costs shall be included in any final
determination or final order issued in the subject arbitration, enforcement
action or legal proceeding.

 

26. Dispute Resolution. The Parties agree to resolve any dispute arising from
this Agreement by arbitration in Springfield, Massachusetts in the English
language before a single arbitrator in accordance with the then current
Streamlined Arbitration Rules of JAMS, and judgment on the award rendered by the
arbitrator may be entered in the United States District Court of the District of
Massachusetts. The Parties will pay equal shares of the arbitrator’s fees and
any administrative fees but will otherwise bear their own expenses. The
arbitrator will have discretion to award any damages available under applicable
law. Except for any stenographer and the arbitrator, attendance at the
arbitration will be limited to the Parties and their counsel and witnesses.
Except as necessary for purposes of an action to enforce, modify, or vacate the
arbitration award, the subject matter of the arbitration, all documents and
other information submitted to the arbitrators, including any transcript of the
proceedings and any award, will be treated as Confidential Information.

  

* * SIGNATURES ON FOLLOWING PAGE * *

 

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IN WITNESS WHEREOF, the Parties hereto have signed this Agreement as of the date
and at the place first above written.

 

CYALUME TECHNOLOGIES INC.   OMNIGLOW, LLC           By: /s/ Zivi Nedivi   By:
/s/ Ira Leemon           Name: Zivi Nedivi   Name: Ira Leemon           Title:
Chief Executive Officer   Title: President           RANDYE M. HOLLAND AND   THE
LEEMON FAMILY LLC STANLEY M. HOLLAND TRUST                 By: /s/ Stanley M.
Holland   By: /s/ Ira Leemon           Title: Trustee, Stanley M. Holland  
Title: Manager           By: /s/ Randye Holland                 Title: Trustee,
Randye Holland                 IRA LEEMON, INDIVIDUALLY                 /s/ Ira
Leemon      

 

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