January 26, 2000
Vulcan Microsystems, Inc.
1785 N.W. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Gentlemen:
This letter agreement contains various terms that are part of our
formation of a limited liability company ("JV Co"), whose members will be
American Access Technologies, Inc. ("AmAcc"), Vulcan Microsystems, Inc.
("Vulcan"), and Grovegate Capital Partners, LLC ("Grovegate"). Additionally,
this letter agreement engages Xxxx Xxxx ("Gray") and Xxxx Xxxxxxx ("Xxxxxxx") as
engineering consultants to AmAcc. This letter agreement constitutes a legally
binding agreement of the parties, despite the parties' intent to enter into a
more definitive agreement regarding JV Co and the relationship between AmAc,
Vulcan and Grovegate.
General: JV Co will be a separate, newly formed limited
liability corporation organized under the laws of the
State of Florida.
Purposes: JV Co will be organized for the purpose of developing
and marketing an e-based value added distributor of
communications equipment comprised of structured
cabling and the switching hardware connected to it,
and providing structured cabling solutions.
Location of
Principal Office: JV Co will initially be located in Miami-Dade County,
Florida in space provided at cost by Vulcan.
Management: As many as 10 Managers of the JV Co may be named,
consisting of 80 percent to be named by XxXxx and 20
percent to be named by Vulcan. Initially, an
abbreviated board will be named (Xxxx Xxxxxxx, Xxxxx
Xxxxx and Xxxxx de la Guardia from AmAcc; and Xxxxxxx
Xxxxxxx and Xxxx Xxxx from Vulcan.)
Matters Requiring
Consent: The charter documents of the JV Co shall provide that
action on the following matters shall only be taken
pursuant to resolutions duly adopted by a vote or
consent of all of the Managers of JV Co.
o Affiliated party agreements, documents or
other arrangements, as well as any
amendment, consent or waiver with respect to
such arrangements;
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o Removal of Managers; each party can
designate and remove its own managers;
o Material employment agreements or the
termination of any executive officer;
o Quarterly budgets for the first year, and
annual budgets thereafter;
o Operating location(s) for JV Co;
o Capital commitments or expenditures in any
calendar quarter that individually or in the
aggregate exceed $250,000;
o Loans, guarantees, or extensions of credit
other than in the ordinary course of
business;
o Amendment of the governing documents of JV
Co;
o Merger into or with or acquisition of all
or part of any business;
o Sale, lease, transfer, or other disposition
of the assets of JV Co having a fair market
value, sale price, or book value at time of
disposition grater than $250,000;
o Liquidation, dissolution, winding up or
voluntary bankruptcy of JV Co;
o Declaration of dividends or distributions;
o Material change in the business of JV Co;
o Issuance, purchase or redemption by JV Co
of any debt, equity, hybrid or other
securities of JV Co, and any change in the
capitalization of JV Co;
o Overriding technology decisions made by
Xxxxxx;
Deadlock Events: In the event that a matter requires the
consent of all of the Managers of JV Co, but after
such consent is sought it is not received, a Deadlock
will be deemed to exist. Upon the occurrence of a
Deadlock, either party may:
(a) Submit the matter to arbitration; or
(b) Exercise the Buy-Sell Option set forth below; or
(c) Require that the Chief Executive Officer of each
party meet to attempt to resolve the Deadlock.
Buy-Sell Option: In case of Deadlock, a party shall have the right to
exercise a buy-sell option (the "Buy-Sell Option"),
whereby the electing party would be required to
designate a price at which it would be willing to sell
its interest or to purchase the other party's interest
in JV Co, and the non-electing party would have 60
days to respond for the option to buy or sell such
interest at that price. The electing party would then
have 60 days to sell its interest or purchase the
other party's interest.
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Dividends: Free cash (after reserves and not otherwise committed
in the budget) will be distributed to the Members pro
rata based on distribution of interests.
Business Plan: The parties will have a written business plan
prepared for the formation and initial operations of
the venture, which is subject to approval of each of
AmAcc and Vulcan, and which will contain a technical
specification.
Officers: A Managing Director, Chief Technical Officers as
needed and a Chief Financial Officer shall be named.
Capital Contributions
And Ownership: (A) (i) Within 1 day following the signing of
this letter agreement, AmAcc shall pay
Xxxxxx & Xxxxx, P.A. $30,000 to prepare a
formal business plan for the venture, and
$36,500 to Vulcan for initial services
associated with JV Co's formation.
(ii) In addition, (i) during the first 60
days following signing of this letter
agreement, AmAcc shall make an additional
capital contribution of $328,500 to JV Co
(as requested to JV Co by Vulcan) for costs
incurred or to be incurred by or for JV Co,
and such funds shall be paid to or as
directed by Xxxxxx, and (ii) from and after
the 61st day following the signing of this
letter agreement, operational expenses may
be derived as a budgeted item from JV Co or
as a loan by both AmAcc and Vulcan to JV Co,
contributions consistent with ownership: 80
percent AmAcc, 20 percent Vulcan, to include
interest per annum of 1% (one percent) above
prime as determined by the Wall Street
Journal. This additional capital
contribution of operational expenses to JV
Co (as requested by Vulcan), may be incurred
by or for the JV Co, and such funds shall be
paid to or as directed by Vulcan.
(iii) AmAcc shall issue 135,000 shares of
its common stock to Vulcan or its designees
upon successful Alpha testing related to
this venture.
(iv) AmAcc shall guarantee any contracts or
other obligations for ongoing commitments
made by JV Co or Vulcan as agent for JV Co,
for which Vulcan might have any obligations
or liabilities in connection with technology
for, or the management of, the system being
developed for JV Co. No obligations shall
exceed $25,000 per month nor
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extend beyond three years without unanimous
consent of the Managers.
(v) AmAcc shall issue to Vulcan or its
designees, upon acceptance of the alpha site
related to this venture, warrants for one
million shares of AmAcc common stock
exercisable at $25 per share at any time and
from time to time for three years from that
date that the warrants are granted.
For its capital contribution, AmAcc shall
receive 76% of the allocations and
distributions of JV Co.
(B) Vulcan shall design and develop the e-site for the
value added distributor for which JV Co is being
formed. Vulcan estimates that it will take 3 to 4
months for the site's initial launch, and 8 to 10
months for the completed site as envisioned by the
parties.
For its capital contribution, Vulcan shall receive
19% of the allocations and distributions of JV Co.
(C) Grovegate Capital Partners, LLC, investment
banking firm that brought the parties together for
the JV Co, and which shall continue to provide
those services affiliated with corporate finance
and investment banking, shall receive 5% of the
allocations and distributions of JV Co.
Registration
Rights: AmAcc shall file a registration statement within one year from
the date of this agreement in which Vulcan or its designees
may register its AmAcc common stock, and Vulcan or its
designees have piggy-back registration rights for its AmAcc
common stock with any SEC Registration that AmAcc may file for
five years following the date of this letter agreement.
Conversion: (i) Vulcan will have the right to convert its interest in JV
Co into shares of AmAcc common stock at any time and from time
to time for five years following the date of this letter
agreement at the conversion formula to be finalized in the
master agreement. If agreement on conversion price formula is
not completed within 30 days, the parties agree to abide by
the decision of a mutually acceptable New York Stock Exchange
Member firm.
(ii) For five years following the date of this letter
agreement, AmAcc will have the right at any time to require
the conversion of all (but not less than all) of Vulcan's
interest in JV Co into shares of AmAcc common stock, if so
required by the investment banker managing an offering of
AmAcc
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common stock in which at least $50 million in gross proceeds
is to be raised.
(iii) The minority interest will be converted into stock. The
conversion formula used for Vulcan to convert its minority
interest in JV Co into shares of AmAcc common stock shall be
as agreed to in the master agreement. If agreement on
conversion price formula is not completed within 30 days, the
parties agree to abide by the decision of a mutually
acceptable New York Stock Exchange Member firm.
Consulting: Immediately after entry into this agreement, Xxxx Xxxx and
Xxxxxxx Xxxxxxx shall enter into a technology consulting
agreement with AmAcc. For such services, Messrs. Gray and
Xxxxxxx will receive warrants for 200,000 shares of AmAcc
common stock, exercisable for cash only; up to and including
180 days from date of issuance at $10, and thereafter at $15
per share until expiration at one year from date of issuance.
AmAcc shall immediately begin and thereafter file a Form S-8
registration statement to register the 200,000 shares
underlying the warrants.
OEM's: Each of the parties and JV Co shall cooperate with each other
in approaching, negotiating with and entering into agreement
with original equipment manufacturers whose products JV Co
seeks to distribute.
Restrictions on
Competition: Each of AmAcc and Vulcan and their affiliates will be
prohibited from directly competing with JV Co; provided,
however, each may conduct and pursue its business as currently
conducted (e.g., AmAcc may continue to sell its products
through other channels of distribution, and Vulcan can develop
e-sites, systems and solutions and provide related products
for other businesses, but neither may have any interest in any
other distributor of structured cabling and the switching
hardware connected to it).
Confidentiality:
All relevant employees of JV Co will execute confidentiality
and invention assignment agreements, which, in part, recognize
intellectual property ownership as specified below. Each party
shall, at all times during the term of the Joint Venture and
thereafter, use its reasonable efforts to safeguard the
secrecy of any of JV Co's confidential information, including
technical information, marketing plans, customer information,
specialized information, or financial information.
Intellectual
Property: All trademarks, trade names, and similar intellectual property
developed by JV Co shall be the property of JV Co. All of the
patents and proprietary technology utilized as part of JV Co's
e-site shall be the property of Vulcan.
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Representations and
Warranties: The parties will make customary representations and warranties
to each other. The parties will agree to indemnify and hold
harmless JV Co and each other for any losses or liabilities
arising from any breach of a representation or warranty.
Vulcan Service
Agreement: Vulcan shall enter into a Systems Administration and
Continuous Development Agreement with JV Co on terms to JV Co
at least as favorable as is customary in the industry.
Definitive
Agreements: The terms of the Joint Venture and the various transactions
related thereto shall be set forth in the following definitive
agreements:
o Master Agreement (setting forth the overall venture formation
agreement among the parties, with accompanying exhibits).
o Articles of Organization of JV Co (setting forth the Articles to
be filed with the Secretary of State).
o LLC Operating Agreement of JV Co (setting forth the agreement of
the parties with respect to the management and operations of JV Co).
o Organizational Resolutions of the Members of JV Co (setting forth
the organizational resolutions).
o Business Plan (setting forth the Business Plan for JV Co).
o System Development Agreement (setting forth the system to be
developed by Vulcan for JV Co).
o Technology License Agreement (setting forth the terms of
technology licensing from Vulcan to JV Co, which shall not require
any additional cash or other expense or capital payments by JV Co
for the lease).
o Confidentiality and Invention Assignment Agreement (setting forth
confidentiality and invention assignment obligations, to be signed
by all employees of JV Co).
o System Administration and Continuous Development Agreement
(setting forth the terms of Vulcan's ongoing vendor services in
administering the system and in additional development of the
system.
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If the foregoing is acceptable to you, please sign and return to us one original
copy of this letter agreement.
Very truly yours,
AMERICAN ACCESS TECHNOLOGIES, INC.
By: S/Xxxx X. Xxxxxxx
Print Name: Xxxx X. Xxxxxxx
Print Title: President
Date: 1/25/2000
Accepted and agreed to:
VULCAN MICROSYSTEMS, INC.
By: S/Xxxxxxx X. Xxxxxxx
Print Name: Xxxxxxx X. Xxxxxxx
Print Title: Secretary of the Corporation, Vulcan Microsystems, Inc.
Date: 1/26/2000
By: S/Xxxx Xxxx
XXXX XXXX
Date: 1/26/2000
By: S/Xxxxxxx X. Xxxxxxx
XXXX XXXXXXX
Date: 1/26/2000
GROVEGATE CAPITAL PARTNERS, LLC
By: S/Xxxxxxx Xxxxxxx
Print Name: Xxxxxxx Xxxxxxx
Print Title: Manager
Date: 1/26/2000
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