Summary of BSML INC - Yahoo! Finance

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or

Item 1.01 Entry into a Material Definitive Agreement.

Asset Purchase Agreement

On February 10, 2009, BSML, Inc. (the "Company"), and its wholly owned subsidiary, Pure Acquisition Co., Inc., a Delaware corporation ("Pure Acquisition"), entered into an agreement (the "APA") to purchase certain assets of Pure Laser Hair Removal & Treatment Clinics, Inc., a Delaware corporation ("Pure"), John Street Holdings, LLC, a Delaware limited liability company ("JSH"), and certain subsidiaries of Pure and JSH (collectively, the "Subsidiaries," and together with Pure and JSH, the "Sellers").

Pursuant to the terms and subject to the conditions set forth in the APA, Pure Acquisition agreed to purchase substantially all of the assets of the Sellers (the "Purchased Assets") for a purchase price of: (i) Two Hundred Thousand Dollars ($200,000) (the "Cash Payment"); (ii) an unsecured promissory note in favor of Investment Partnership (2006) L.P. ("IP 2006") in the aggregate principal amount of Five Hundred Thousand Dollars ($500,000) (the "Note"); (iii) the Company's agreement for the twelve month period immediately following the closing of the purchase of the Purchased Assets, that IP 2006 can acquire the same type of equity securities offered by the Company in one or more offerings for a price per share equal to the price paid by third party investors up to a maximum of $2,500,000 (the "Investment Participation Agreement"); (iv) a twelve month warrant in favor of IP 2006 with the rights to purchase up to $2,500,000 (or such lesser amount as is available after IP 2006's exercise of rights under the Investment Participation Agreement) of common stock of the Company (the "Warrant"); and (v) assumption of certain liabilities (the "Assumed Liabilities") of the Sellers.

The Assumed Liabilities consist of, and are limited to, the following:

i. each Assigned Equipment Lease set forth in the APA;

ii. each Assigned Real Estate Lease set forth in the APA;

iii. each Assigned Physician Agreement;

iv. the BDC Loan ( the lender being the Business Development Bank of Canada ("BDC")), the loan documents describing which are attached to the APA, including granting additional security interests and providing additional guarantees to be more fully described in written agreements between the holder of the BDC Loan and the Company;

v. the remaining prepaid customer service liabilities as set forth in the APA with respect to Sellers' customers who have prepaid for treatments; and

vi that certain specified bridge loan of the Sellers (the "Bridge Secured Loan") assumed with recourse only to those Purchased Assets which currently serve as collateral for the Bridge Secured Loan.

Consummation of the asset sale under the APA was subject to customary closing conditions. In addition, because the Sellers are debtors-in-possession under title 11 of the United States Code, 11 U.S.C. ss 101 et seq. (the "Bankruptcy Code"), and filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the "Chapter 11 Case") on January 27, 2009, in the United States Bankruptcy Court for the Northern District of Georgia (the "Bankruptcy Court"), any sale of assets or transfer of liabilities was subject to approval of the Bankruptcy Court having jurisdiction over the bankruptcy proceedings of the Sellers.

As such, on January 30, 2009, the Sellers filed with the Bankruptcy Court their Emergency Motion of Debtors For Authority to Sell Property Free and Clear of Liens, Claims, and Encumbrances Pursuant to 11 U.S.C. Sections 105(a) and
363(b), (f) and (m), and to Assume and Assign or Reject Leases Pursuant 11 U.S.C. Section 365 (the "Sale Motion"). In the Sale Motion, the Sellers proposed to sell certain assets and assign certain real property leases, equipment leases and other contracts to Pure Acquisition (the "Assets and Liabilities"). A hearing on the sale requested in the Sale Motion was held on February 9, 2009, and continued to February 12, 2009 (the "Sale Hearing").

On February 17, 2009, the Bankruptcy Court entered an order (the "Sale Order") granting the Sale Motion and authorizing the sale and assignment of the Assets and Liabilities pursuant to the APA. Under the Sale Order, the closing date of the APA was set at March 31, 2009, subject to an earlier closing if all conditions of the APA and Sale Order were met prior to that date. The "Effective Date" of the APA was set at February 18, 2009.

The Sale Order further supplemented the APA by requiring Pure Acquisition to perform the following on the Effective Date:

i. pay to the Sellers the Cash Payment, which was non-refundable and held in escrow by counsel for the Sellers for the benefit of the Sellers' creditors and administrative expense claimants;

ii. pay the sum of $30,000 to be held in escrow for any unpaid attorneys' fees incurred by counsel for the Sellers in connection with the transactions described in the APA and the Sale Order; provided, however, that final payment of any such fees was to remain subject to approval by the Court pursuant to a fee application;

iii. assume managerial control of the Sellers' operations;

iv. reject certain real estate leases specified in the APA and the Sale Order; and

v. make certain post-petition February lease payments with respect to the real estate leases identified on Schedule 2.3(b) of the APA, subject to certain conditions specified in the Sale Order.

Additionally, the Sale Order required that from the Effective Date to the Closing Date (the "Interim Period"), Pure Acquisition would pay, and the Company would guarantee payment of, all operating expenses of the Sellers accruing or coming due during the Interim Period, including without limitation, all employee obligations; payments to suppliers; taxes; insurance premiums; marketing expenses; contractual obligations; repairs; and promotions, to the extent such operating expenses were not paid from funds generated from the Sellers' operations during the Interim Period. During the Interim Period and following the Closing, Pure Acquisition was required to perform services necessary to fulfill pre-paid customer obligations to the extent permitted by and otherwise consistent with applicable state and federal law.

Further, on March 24, 2009, BDC agreed to accept Five Hundred Seventeen Thousand Dollars ($517,000) in full satisfaction of the obligations of Pure Acquisition under the BDC Loan. On April 2, 2009, as a condition precedent to the Credit Agreement, as described in the Current Report on Form 8-K filed with the SEC on April 2, 2009, Pure Acquisition paid the BDC loan in full and BDC released all of the collateral secured by the BDC Loan. Accordingly, neither Pure Acquisition nor the Company has any further obligation in favor of BDC.

On March 31, 2009, the APA was amended by that certain First Addendum to the . . .

Item 3.02. Unregistered Sale of Equity Securities.

As discussed above under Item 1.01, the Company granted Participation Rights and Warrants to IP 2006 to purchase up to a maximum aggregate of $2,500,000 worth of shares of the Company's equity securities. Additionally, if the Company issues a stock dividend, consummates a stock split or consolidation, a recapitalization or a reorganization of its share capital, or takes any similar action constituting a "Dilutive Event" after the effective date of the Investment Participation Agreement, the Company will issue concurrently therewith additional warrants to purchase such number of shares of common stock as will entitle IP 2006 to maintain the same beneficial ownership in the Company after the Dilutive Event as IP 2006 had prior to the Dilutive Event. The Participation Rights and Warrants will expire on April 1, 2010. The Participation Rights have an exercise price equal to the lowest price payable by a third party buyer of the Company's common stock in an equity offering. The Warrants have an exercise price equal to the 30 day VWAP trading price of the Company's common stock calculated as of the closing date of the APA. Additional terms relating to the Participation Rights and the Warrants are discussed above under Item 1.01.

The Participation Rights and Warrants described in Item 1.01 above were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 (the "Securities Act") and regulations promulgated thereunder.

Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Separation Agreement

Subsequent to, and in connection with, execution of the APA and Transition Agreement, the Company, Pure Acquisition and Executive entered into a separation agreement (the "Separation Agreement"), whereby the parties agreed to terminate their relationship and modify Executive's obligations under the Transition Agreement.

Executive agreed to resign all of his positions with Pure, JSH, 2012710 Ontario and all of their respective subsidiaries effective upon execution of the Separation Agreement. Pure Acquisition agreed to assume certain personal guaranties of Executive with respect to equipment leases that were assumed by Pure Acquisition pursuant to the APA. The parties agreed that the promissory note among Pure, JSH, Executive and J3 Evolution, LLC, dated January 9, 2009 (the "Note"), will remain in full force and effect and that the Company and Pure Acquisition will promptly begin to sell the equipment that serves as collateral under the Note.

Pursuant to the Separation Agreement, the Transition Agreement will remain in full force and effect; provided however, Executive will not provide the services set forth in Section 3 of the Transition Agreement. The Company and Pure Acquisition agreed to continue operation of the med spa, known as the Sedona Med Spa, until operation of the Sedona Med Spa is no longer in the best interests of the Company.

The foregoing summary of the terms and conditions of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Separation Agreement, which will be filed in an amended Current Report.