SPHERICS LIMITED
Victoria House - Box 58
The Valley, Anguilla BWI
April 19, 2000
Virtual Reality, Inc.
000 Xxxx Xxxxxx - Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
CEO & Chairman
Re: Letter Agreement for Operating Capital Financing from Spherics
Limited
Dear Xx. Xxxxxxx,
This Letter Agreement, when countersigned by you, shall be binding
agreement between Spherics Limited (the "Investor") and Virtual Reality, Inc.
(The "Company") for a Two Million Dollar ($2,000,000) investment in the Company
in return for Forty Million (40,000,000) restricted shares of the Company's
common stock, $.015 par value (the "Shares"), pursuant to the terms and
conditions found herein:
1. Fundamental Terms. The Investor shall invest a total of Two Million Dollars
($2,000,000) (the "Investment") in the Company. The Investment shall
consist of One (1) initial payment of Five Hundred Thousand Dollars
($500,000) and one or more payments totaling One Million Five Hundred
Thousand Dollars ($1,500,000)(the "Balance"). The first payment shall be
made on the One (1) month anniversary of this Letter Agreement (the "First
Payment"). The Balance shall be satisfied through a payment schedule to be
determined by the Parties in a subsequent agreement, written or otherwise.
As consideration for the Company's sale of the Shares, the Company shall
issue the Shares to the Investor, upon execution of this Letter Agreement.
The Shares shall be fully paid and nonassessable, free and clear of all
liens, encumbrances, options, restrictions and legal or equitable rights of
others not a party to this letter. The investment may take the form of
equity or loan, or a combination thereof.
2. Use of Proceeds. The Investor anticipates and intends that the Company
shall use the Investment to satisfy the operating capital requirements of
Intellashop, Inc., the Company's intended acquisition (the "Acquisition").
In the event that the Company does not successfully complete the
Acquisition within One Hundred Twenty (120) days from the date hereof, the
Company shall promptly return all payments received pursuant to paragraph 1
of this Letter Agreement and the Investor shall, simultaneous with such
remittance, return the Shares to the Company.
3. Closing. Payment of the First Payment for, and delivery of the Shares shall
be made at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxx, LLP, 000 Xxxx Xxxxxx
- Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be
agreed upon by the Investor and the Company, and shall be made at the time
and date of execution of this Agreement (such payment and delivery being
herein called the "Closing"). The time and place of the remaining payments
of the Balance shall be made as shall agreed upon subsequent to this Letter
Agreement by the Investor and the Company.
4. Expenses. Each party to this Letter Agreement shall bear its own expenses.
5. Indemnification. The Company hereby agrees to defend, indemnify and hold
harmless the Investor, and all of Investor's officers, directors,
attorneys, stockholders, employees and agents against any and all expenses
of defense and investigation related to this Letter Agreement and any
agreements or proceedings related thereto.
6. Confidentiality. Investor hereby agrees that all information provided by
the Company and identified as "confidential" by the Company will be treated
as such, and that the Investor shall not make any use of such information
other than with respect to the transaction contemplated by this Letter
Agreement. If the agreements contemplated by this letter are terminated,
Investor shall return to the Company all such confidential information in
its possession, or will certify to the Company that all of such that has
not been returned has been destroyed.
7. Termination. This letter of intent may not be terminated unless the
Investor and the Company have agreed to such in writing. In the event of
such termination, all provisions hereof shall terminate.
8. Governing Law. This letter agreement shall be governed by, and construed
with, the laws of the State of New York, without giving effect to conflict
of laws principles thereof, and in any action to enforce or interpret or
arising under any of the provisions of this agreement, the parties
expressly agree to submit to the jurisdiction of any Federal or State court
sitting in New York County, State of New York.
Sincerely,
SPHERICS LIMITED
By: /S/ Xxxx X. Xxxxx
-------------------------------
Name: Xxxx X. Xxxxx
Title: Corporate Counsel and
Authorized Agent
ACCEPTED AND AGREED TO as of the date first above written:
VIRTUAL REALITY, INC.
By: /S/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
CEO and Chairman
