Exhibit 10.17
Xxxx Interactive Services, Inc.
0000 Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
March 29, 2002
Xxxx X. XxXxxxx
President
Xxxx, Inc.
P.O. Box 949
Casper, WY 82602
Re: Exercise of Option
Dear Xxxx:
This will confirm Jona, Inc.'s agreement to exercise the option to purchase
2,500,000 Units of the securities of Xxxx Interactive Services, Inc. (the
"Company") for $2,500,000.00 that Jona, Inc. acquired pursuant to the Securities
Purchase Agreement dated as of January 17, 2002, between the Company and Jona,
Inc. Jona, Inc. has agreed to exercise the option prior to March 31, 2002, four
months before the option expires, in order to enable the Company to eliminate
the "going concern" qualification which appeared in the Company's auditors'
report for fiscal 2000 from the auditors' report for fiscal 2001, and to improve
the Company's prospects for having its common stock reinstated for listing on
the Nasdaq Stock Market. It is necessary for the option to be exercised in
March, 2002, to achieve these purposes, as the auditors will issue their report
for fiscal 2001 before the end of the month and the Company is required to
submit to Nasdaq by April 9, 2002, the additional information the Company
desires Nasdaq consider in connection with the Company's appeal of the
de-listing of its common stock from the Nasdaq National Market.
In consideration for Jona, Inc. exercising the option in March, 2002, the
Company will grant to Jona, Inc. an additional stock purchase warrant
representing the right to acquire 2,500,000 shares of the Company's common stock
at $1.00 per share (the "New Warrant"). The terms of the New Warrant will be
identical to the terms of the warrants
included with the Units (the "Unit Warrants"), except the New Warrant will not
contain the call provision included in the Unit Warrants which enables the
Company to call up to two-thirds of the shares subject to the Unit Warrants
based on future market prices for the Company's common stock.
This will also confirm that within the next two weeks the Company will
provide Jona, Inc. a written report outlining the steps the Company, including
its Jabber, Inc. subsidiary, is taking to assure maximum protection of its
intellectual property.
Upon receipt of the $2,500,000.00 payment for the purchase of the Units,
the Company will deliver to Jona, Inc. the Unit Warrants and the New Warrant and
will instruct the Company's transfer agent to issue to Jona, Inc. a stock
certificate for 2,500,000 shares of the Company's common stock.
If you have any questions, please feel free to contact me at your
convenience. Your continued support of the Company is greatly appreciated.
Sincerely,
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Chief Executive Officer
Xxxx Interactive Services, Inc.
