February 20, 2001
GRANT OF OPTION TO SELL
@VISO'S INTEREST IN PEOPLEPC EUROPE NV
Binding Memorandum of Agreement
This Memorandum of Agreement sets forth the terms of an option to sell to
PeoplePC, Inc. a Delaware Corporation ("PeoplePC" or the "Company") all of the
shares (the "NV Shares") held by @viso Limited, a UK Company ("@viso") in
PeoplePC Europe NV, a Dutch company ("PPC Europe"), such that after the
exercise in full of the option to sell, PeoplePC will own all of the
outstanding capital stock of PPC Europe and @viso will own stock in PeoplePC.
Primary Put Option: Upon exercise by @viso of the Primary Put Option,
People PC agrees to buy the NV Shares. The Primary Put
Option may be exercised only with respect to all, and
not less than all, of the NV Shares held by @viso at
the time of exercise.
The consideration for PeoplePC's purchase of the
NV Shares will be shares of PeoplePC Common Stock
("Common Stock"), or if the Stockholder Approval (as
defined below) shall not yet have been obtained,
shares of PeoplePC preferred stock having the terms
set forth on Exhibit A attached hereto (the "Preferred
Stock"). PeoplePC agrees not to issue shares of the
Preferred Stock to any other investor prior to the
earlier of the Stockholder Approval and the Issuance
(each as defined below).
The number of shares of Common Stock or Preferred
Stock issued in consideration of the purchase of the
NV Shares (the Primary Put Share Number") will be
calculated in accordance with the following formula:
V * (W + Y + X) = X
where
V = The number (expressed as a percentage)
derived by multiplying (i) 0.32567 by
(ii) the quotient obtained by dividing
(a) the number of NV Shares as of the
date hereof by (b) the sum of (i)
47,619,048 (the total number of
outstanding shares of PPC Europe as of
the date hereof) plus (ii) the
cumulative number of PPC Europe shares
purchased by Softbank upon exercise of
the Warrant (as defined below) as of
the date of the exercise of the Primary
Put Share Option by @viso.
W = 108,789,000.
X = The Primary Put Share Number.
Y = 2,843,468 plus the number of additional
employee stock options that (i) have
been granted but remain unvested as of
the date hereof, (ii) are scheduled to
vest within 12 months of the date
hereof, (iii) have become vested prior
to the date the Primary Put Option is
exercised, and (iv) have a strike price
less than $3.44.
The Primary Put Share Number will be subject to
adjustment in the case of a stock split, stock
dividend, recapitalization or other similar event.
Notwithstanding anything to the contrary set forth
herein, no exercise of the Primary Put Option
subsequent to a partial exercise or a series of
partial exercises of the Secondary Put Option in
connection with a Triggering Event shall result in the
issuance of a number of shares in excess of the Cap
(as such terms are defined below).
At the written request of @viso, the Company shall
calculate X and shall furnish such calculation to
@viso within 3 business days of such request. The
Company will also furnish calculations of X to @viso
on a quarterly basis.
The Company represents and warrants that: (i) as of
the date hereof it has 108,789,000 issued, outstanding
and fully vested shares of Common Stock, has granted
options to purchase 2,843,468 shares of Common Stock,
which options are vested and have a strike price equal
to or less than $3.58, and has granted options to
purchase 6,393,315 shares of Common Stock with a
strike price equal to or less than $3.58, which will
become exercisable within 12 months of the date
hereof; (ii) the issuance of the put options hereunder
has been duly authorized, and when the Preferred Stock
or Common Stock is issued it will be validly issued,
fully paid and non-assessable; (iii) subject to the
requisite approval by the Company's stockholders, the
Company has all requisite corporate power and
authority to enter into this Memorandum of Agreement
and to consummate the transactions contemplated
hereby; and (iv) this Memorandum of Agreement has been
duly executed and delivered by the Company a
obligations of the Company enforceable against the
Company in accordance with its terms except as limited
by applicable
-2-
Company in accordance with its terms except as limited
by applicable laws of bankruptcy, insolvency and other
customary limitations.
Term of Primary Put Five years.
Option:
Secondary Put Option Upon exercise by @viso of the Secondary Put Option,
People PC agrees to buy the NV Shares. Except with
respect to a Triggering Event (as defined below), the
Secondary Put Option may be exercised only with
respect to all, and not less than all, of the NV
Shares held by @viso at the time of exercise.
For the Secondary Put Option, the NV Shares held by
@viso as of the date hereof will be valued in the
aggregate at US$65,000,000 (the "Secondary Put
Conversion Value"). The consideration for PeoplePC's
purchase of the NV Shares will be shares of Common
Stock or shares of Preferred Stock, valued at the
daily average closing price for Common Shares during
the 45-trading-day period preceding such purchase,
except in the case of the exercise of the Secondary
Put Option in connection with a Triggering Event in
which case the Common Stock will be valued as set
forth in "Future Financings and Acquisitions by
PeoplePC"; provided, however, that the aggregate
number of shares of Preferred Stock or Common Stock
issued (taken together with any such shares issued in
connection with any Triggering Events) shall not
exceed XX (the "Cap"), which number shall be
calculated as follows:
.2 * (W + Y + XX) = XX
where
XX = The Cap.
The Cap will be adjusted in the case of a stock split,
stock dividend, recapitalization or other similar
event.
Term of the Secondary The Secondary Put Option may be exercised: (i) during
Put Option the 60-day period following the end of the Primary Put
Option Term, or (ii) in connection with a Triggering
Event or a Change of Control (as defined below).
Assignment of Put @viso may assign: (i) NV Shares held by @viso as of
Options and NV Shares the date hereof; and (ii) a one half interest in the
rights under each of the Primary Put Option and the
Secondary Put Option ("Half Interest") to SB Holdings
(Europe), Ltd., a UK corporation, and a Half Interest
to Vivendi Universal or a designated affiliate (the
"Permitted Transferees"). No other assignment of
rights relating to either put option (including any
subsequent assignment by a Permitted Transferee) may
take place without the prior written consent of
PeoplePC, Inc. The foregoing
-3-
notwithstanding, @viso may assign its options to an
affiliate of @viso, provided that @viso concurrently
notifies the Company in writing of such action.
Stockholder Approval At its annual meeting scheduled for May 31, 2001, the
Company will submit to its stockholders for approval
the issuance (the "Issuance") of Common Stock upon the
exercise of the Puts contemplated hereby (including
upon conversion of the Preferred Stock) (the
"Stockholder Approval").
The Company through its Board of Directors will
recommend the granting of the Stockholder Approval and
will solicit proxies and otherwise use its best
efforts to obtain the Stockholder Approval.
Voting Agreement The parties have provided for holders of a majority of
the issued and outstanding Common Stock (the "Company
Stockholders") to execute this Memorandum of
Understanding. By signing this Memorandum of
Understanding, the Company Stockholders agree for
@viso's benefit to vote their shares in favor of the
Issuance. Each Company Stockholder also agrees not to
sell, assign, transfer or convey its shares of Common
Stock (any such transfer of any such shares, a
"Transfer") except for Transfers (i) which together
with all other Transfers which have previously taken
place do not cause the aggregate number of shares held
by the Company Stockholders to fall below a majority
of the Company's then outstanding capital stock, on a
fully-diluted basis, or (ii) in connection with which
the transferee agrees in writing with @viso to be
bound by the terms of this section. The foregoing
agreements shall also be reflected in a definitive
voting agreement (the "Voting Agreement").
Future Financings and If PeoplePC issues new equity securities in one or
Acquisitions by more rounds of financing subsequent to the date hereof
PeoplePC the purpose of which is to raise capital or in one or
more acquisitions subsequent to the date hereof of the
stock or assets of a company (each, a "Triggering
Event"), @viso may exercise the Secondary Put Option
with respect to that portion of its NV Shares equal to
the ratio between the shares issued in such Triggering
Event and the total shares outstanding at the closing
of the Triggering Event (the "Ratio") in exchange for
shares of Common Stock (or Preferred Stock as provided
above). The aggregate value of the NV Shares which
@viso will be entitled to put to PeoplePC will equal
the Secondary Put Conversion Value multiplied by the
Ratio; provided, however, that the aggregate number of
shares of Preferred Stock or Common Stock exchanged
for NV Shares cumulatively under this Memorandum of
Agreement shall not exceed the Cap, as such applies to
@viso or Softbank, as of the Preferred Stock or the
Common Stock issued to @viso shall be (i) the price at
which Common Stock is sold
-4-
to investors in the case of a financing or (ii) the
value accorded the Company's shares in the case of an
acquisition. Refer to Exhibit B for an example.
In the event of any partial exercise of the Secondary
Put Option in connection with a Triggering Event,
@viso shall sell equal percentages of the Series A
Preferred and the Series B Preferred Stock that
comprise the NV Shares.
Adjustments with regard If @viso sells less than all of its NV Shares in
to Partial Exercises connection with a Triggering Event, each
of the Primary Put Share Number, the Secondary Put
Conversion Value and the Cap will be treated as follows
in connection with @viso's exercise of its rights under
this agreement subsequent to such partial exercise: (i)
the Secondary Put Conversion Value will be reduced by an
amount equal to the aggregate value of the NV Shares
(calculated as set forth on Exhibit B hereto) sold to
the Company in such partial exercise (the "Aggregate
Partial Exercise Value"); (ii) the Primary Put Share
Number will be reduced by an amount equal to the product
of (x) the Primary Put Share Number immediately prior to
the Triggering Event multiplied by (y) the ratio
determined by dividing (1) the Aggregate Partial
Exercise Value by (2) the Secondary Put Conversion Value
immediately prior to such partial exercise; and (iii)
the Cap shall not be adjusted, but the number of shares
issued in such partial ex aggregate maximum number of
shares issuable under the Cap. Refer to Exhibit B for an
example.
Change of Control If PeoplePC engages in a reorganization, merger,
consolidation, sale of all or substantially all its
assets, or sale of 50% or more of its capital stock
where its pre-transaction stockholders own less than 50%
of the surviving or acquiring entity (a "Change of
Control"), @viso will have the right to sell to PeoplePC
all, but not less than all, of the NV Shares held by
@viso at the time of exercise, and PeoplePC will have
the right to buy from @viso all, but not less than all,
of the NV Shares held by @viso at the time of exercise.
Such purchase and sale will occur immediately prior to a
Change of Control. If the price per share paid for the
Common Stock by the acquiror in the transaction(s)
effecting the Change of Control is greater than $3.44
per share (as adjusted for stock splits, stock
dividends, and similar events) then such purchase and
sale will be effected pursuant to the Primary Put
Option, and otherwise pursuant to the Secondary Put
Option.
Tag-Along Rights Pursuant to the Voting Agreement, @viso, the Company,
and the holders of 5% or more of the Company's Common
Stock (the "Holders") will enter into an agreement
giving each party the right to participate pro rata and
on the same terms in any sales by any other party that
in the aggregate transfer ownership of in excess of 50%
of
-5-
the voting power of PeoplePC's issued and outstanding
shares.
Registration Rights @viso will receive the following registration rights
with respect to Common Stock paid to @viso pursuant to a
registration rights agreement in a form mutually agreed
to by the parties:
(1) Demand Rights.
@viso and Softbank shall be entitled to request that
PeoplePC file registration statements covering the
registration of the Common Stock; provided, however,
that PeoplePC shall not be obligated to effect such
registration until August 15, 2001.
(2) Piggyback Rights.
@viso shall be entitled to "piggyback" registration
rights on all registrations initiated by PeoplePC or the
selling stockholders of PeoplePC.
(3) Expenses.
All registration expenses shall be borne by PeoplePC
(other than underwriting discounts and commissions).
(4) Termination of Rights.
Registration Rights terminate when all shares subject to
registration rights may be sold under Rule 144 of the
Act during any single 90-day period. PeoplePC
acknowledges and agrees that for so long as Xxxxxxx has
a representative on the Company's Board of Directors,
Vivendi shall constitute an "affiliate" of the Company
as defined in Rule 144.
Softbank Warrant The warrant (the "Warrant") to purchase shares of PPC
Europe granted to Softbank Capital Partners LP and
permitted assigns ("Softbank") in the "Shareholders'
Agreement" dated June 30, 2000 will be modified as
follows:
At or before the time when @viso exercises its Primary
Put Option or Secondary Put Option in whole or in part
(in the case of a Triggering Event), Softbank will
decide whether to exercise the Warrant in whole or in
proportional part.
Upon exercise of the Warrant, Softbank will receive a
Primary Put Option and a Secondary Put Option
exercisable upon substantially the same terms as the
options received by @viso. The number of shares in
Softbank's Primary Put Number will be determined by the
formula
-6-
+
stated in the paragraph "Primary Put Option," above,
except that V will be defined as follows:
V = the number (expressed as a percentage)
derived by multiplying (i) 0.32567 by
(ii) the quotient obtained by dividing
(a) the cumulative number of PPC Europe
shares purchased by Softbank upon
exercise of the Warrant (the "Warrant
Shares") by (b) the sum of (i)
47,619,048 (the total number of
outstanding shares of PPC Europe as of
the date hereof) plus (ii) the number of
Warrant Shares.
For Softbank's Secondary Put Option, the NV Shares held
by Softbank on exercise of the Softbank Warrant will be
valued in the aggregate at US$7,142,857. The cap on the
number of shares in the Secondary Put Option will be
determined by the formula stated in the paragraph
"Secondary Put Option," above, except that the first
multiplicand, instead of .2, will be determined in
accordance with the following formula:
Multiplicand = .2 multiplied by a fraction,
the numerator of which is the
cumulative number of Warrant
Shares and the denominator of
which is 16,666,667.
If Softbank elects not to exercise the Warrant in whole
or in part (as the case may be), the Warrant (or, in the
case of a partial exercise, the appropriate portion of
the Warrant) will be cancelled. The Warrant will be
further modified to delete the following sentence from
paragraph 2.2(a):
"The warrant shall become exercisable, and must be
exercised (i) at the request of Company, but no
sooner than six months after the Closing Date or
(ii) immediately prior to (A) an acquisition, sale
or merger of or by the Company resulting in a
change in control of the Company, (B) a merger of
the Company with and into PeoplePC, or acquisition
of all of the Company's assets or shares by
PeoplePC or (C) the Company's IPO, on terms and
conditions more fully set forth therein."
Vivendi Marketing @viso shall use its commercially reasonable efforts
Assistance during the nine months following the date hereof to
induce Vivendi to render to PeoplePC reasonable
marketing assistance in connection with enterprise
programs, including making introductions to potential
clients, consulting on strategic and marketing issues,
and otherwise recommending to others PeoplePC's
products and services. In addition, during the next
nine months, Xxxxxxx will provide positive letters of
reference signed by senior Vivendi executives, which
letters will relate to Xxxxxxx's own commercial
relationship with PeoplePC.
-7-
The parties hereto acknowledge that Softbank will not
have have any obligation to the Company with respect to
the immediately preceding sentence.
Board Representation: After execution of this document but before exercise
by @viso of the Primary Put Option or at least
US$39,000,000 in value under the Secondary Put Option,
Xxxxx Xxxxxxx will have the right to attend meetings
of PeoplePC's Board of Directors as an observer. Upon
exercise by @viso of the Primary Put Option or at
least US$39,000,000 in value under the Secondary Put
Option, and until @viso or its permitted distributees
sell in excess of 40% of the sum of the options
granted hereunder and the shares cumulatively received
upon exercise thereof, @viso's designee will be
assured of a seat on the PeoplePC, Inc. Board of
Directors. Notwithstanding the foregoing, in the event
of the assignment by @viso of a Half Interest to
Vivendi, @viso's designee will be assured a seat on
the PeoplePC, Inc. Board of Directors until Xxxxxxx
sells in excess of 40% of the sum of the options
thereby assigned and the shares cumulatively received
upon exercise of the options thereby assigned. For so
Vivendi, @viso's designee will be Mr. Xxxxxxx. The
Company will propose @xxxx's designee as part of the
Company's slate of directors and the Holders will
agree pursuant to the Voting Agreement to vote their
shares in favor of such election at any meeting of the
stockholders of the Company (or action by written
consent). The parties agree that Xxxxxxx will have the
right to designate @viso's designee.
Further Covenants Upon execution of the Definitive Documents, the
parties agree (i) to terminate that certain
Shareholders Agreement dated June 30, 2000 by and
among PPC Europe, the shareholders of PPC Europe, and
certain affiliates of such shareholders (the
"Shareholders Agreement"), (ii) to amend the Articles
of Association of PPC Europe to carry into effect the
transactions contemplated by this Memorandum of
Agreement, including but not limited to, termination
of the dividend payable on the Series B Preferred
Shares of PPC Europe as set forth in Article 15
thereof, and (iii) to obtain the resignation of the
@viso representatives on the Board of Directors of PPC
Europe.
Closing Conditions The closing of the sale of stock upon exercise of the
Primary Put Option or the Secondary Put Option granted
hereunder (the "Closing") will be subject to
termination of the waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
The Company shall use its best efforts to secure such
termination and any required regulatory approval as
promptly as practicable.
-8-
Bridge Loan Concurrently with execution of this Memorandum of
Agreement, PPC Europe will lend $15,000,000 to
PeoplePC to be used for general corporate and working
capital purposes against receipt of a promissory note
of the Company in the form attached hereto as Exhibit
C. The note will have a 90-day term, and at maturity
will be repayable automatically unless extended with
@viso's sole consent. Upon execution of the Definitive
Documents, the note will convert into a demand note.
In either form, the note will bear a market rate of
interest. In the event of a Change of Control, the
Company will ensure that the acquiror assumes the
Company's obligations under the note.
Lending Authority upon From and after execution of the Definitive Documents
Signing of Put Option contemplated by this document, the CEO, CFO, or
Agreement Chairman of PeoplePC will be authorized to arrange for
further loans from PPC Europe to PeoplePC, for
application to general corporate and working capital
purposes. The note will be a demand note and will bear
a market rate of interest. The Company agrees not to
take any actions with respect to PPC Europe that
would, through causing insolvency of PPC Europe,
prevent or delay the exercise of either put option.
Fees and Expenses: Each party will pay its own legal fees and other
expenses incurred by it in connection with the
transactions contemplated by this Memorandum of
Agreement.
Governing Law: Delaware law.
Binding Agreement This Memorandum of Agreement is intended to be a
binding agreement, and not merely an expression of
intent to negotiate or enter into an agreement. The
parties agree that this Memorandum of Agreement may be
executed by fax in counterparts.
Definitive Agreements The parties agree to reflect their agreements
contained herein in greater detail in a Purchase
Option Agreement, a Certificate of Designation, a
Voting Agreement, a Registration Rights Agreement, and
a Note (collectively, the "Definitive Documents"), in
form and substance reasonably satisfactory to the
relevant parties and shall negotiate in good faith and
use best efforts to cause the Definitive Documents to
be finalized and executed as promptly as practicable
after the date hereof. The Company shall cause drafts
of the Definitive Documents to be prepared and
distributed to the other parties not later than ten
(10) business days after the date hereof. The Put
Option Agreement will contain representations and
warranties by PeoplePC and will require that @viso
receive an opinion of counsel of PeoplePC that any
shares issued by PeoplePC in connection with the
purchase of the NV Shares will upon issuance be duly
authorized, validly issued, fully paid,
non-assessable, an execution and delivery of the
Definitive Agreements, this agreement shall terminate
and be of no further force and effect.
-9-
Preferred Stock By February 21, 2001, the Company shall file with the
Secretary of State of Delaware its Certificate of
Designation to create the Preferred Stock with the
terms set forth on Exhibit A hereto.
-10-
EXECUTED AND AGREED TO THIS 20TH DAY OF FEBRUARY 2001, BY:
PeoplePC, Inc. @viso Limited
By: /s/ Xxxxxxxx Xxxxx By: /s/ Xxxxx Xxxxxxx
------------------- -----------------------
Name: Xxxxxxxx Xxxxx Name: Xxxxx Xxxxxxx
----------------- --------------------
Title: CEO Title: Director
---------------- --------------------
PeoplePC Europe N.V. SOFTBANK Capital Partners LP
SOFTBANK Capital LP
SOFTBANK Capital Advisors Fund LP
By: /s/ Xxxxxxxx Xxxxx By: SOFTBANK Capital Partners LLC
------------------ its General Partner
Name: Xxxxxxxx Xxxxx Name: /s/ Xxxxxx X. Xxxxxx
---------------- ---------------------
Title:------------------------- Title: Administrative Member
---------------------
Softbank Technology Ventures IV L.P.
Softbank Technology Advisors Fund L.P.
By: /s/ Xxxx X. Xxxxxxxx /s/ Xxxx Xxxxx
-------------------- ---------------------------
Xxxx Xxxxx
Name: Xxxx X. Xxxxxxxx
------------------
Title: Executive Managing Director
---------------------------
-11-
EXHIBIT A
PURCHASE OF @VISO INTEREST IN PEOPLEPC EUROPE N.V.
Summary of Terms
Rights, Preferences and Privileges of Preferred Stock:
Conversion: The Preferred Stock shall automatically convert into
Common Stock upon the date PeoplePC receives the
Stockholder Approval, at the rate of one share of Common
Stock for each share of Preferred Stock, subject to
adjustment in the event of any stock split, stock
dividend recapitalization or other similar event.
Voting Rights: The Preferred Stock will be non-voting; except as set
forth below.
Automatic Conversion: If the Stockholder Approval of the Issuance has not
occurred by June 30, 2001, the holders of the Preferred
Stock shall be entitled to a liquidation preference
equal to the original issue price, which shall be deemed
to be the price per share determined by dividing (i) the
Secondary Put Conversion Value (in the case of exercise
of either Put Option in full) or the Aggregate Partial
Exercise Value (in the case of any partial exercise of
the Secondary Put Option) by (ii) the total number of
shares of Preferred Stock issued upon exercise of the
Put at the time of the liquidation event. Thereafter,
any remaining assets of the Company shall be distributed
to the holders of Common Stock.
In case of any consolidation of the Company with, or
merger of the Company into, any other entity, any merger
of another entity into the Company (other than a merger
which does not result in any reclassification,
conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or
transfer of all or substantially all of the assets of
the Company, the Preferred Stock shall automatically
convert into the kind and amount of securities, cash and
other property receivable upon such consolidation,
merger, sale or transfer by a holder of the number of
shares of Common Stock of the Company into which the
Preferred Stock might have been converted immediately
prior to such consolidation, merger, sale or transfer.
Protective Provisions: The consent of the holders of at least a majority of the
outstanding shares of Preferred Stock, voting as a
separate class, shall be required prior to any action
that would (i) amend, alter, repeal, or change
(including by merger or consolidation or share exchange)
the rights, preferences or privileges of the Preferred
Stock, (ii) increase or decrease the total number of
authorized shares of Preferred Stock, (iii) result in
the issuance of shares of Preferred Stock (or securities
convertible into or exercisable for Preferred Stock) to
any person other than @viso or (iv) authorize or issue,
or obligate itself to issue, any other equity security,
including any other security convertible into or
exercisable for any equity security, having a preference
over, or being on a parity with, the Preferred Stock.
In the event of any tender offer for shares of Common
Stock, the Company shall concurrently offer to purchase
the same percentage of the outstanding shares of
Preferred Stock as the maximum percentage of the shares
of outstanding Common Stock offered to be purchased in
such tender offer at the tender offer price, and subject
to the condition that such tender offer is consummated.
If such tender offer involves an exchange offer, such
price shall be determined by reference to the market
value of the securities offered, or, if not publicly
traded, then by an independent investment banker
selected by the holders of Preferred Stock and
reasonably acceptable to the Company. In the event such
tender offer is made in connection with a negotiated
acquisition of PeoplePC, the Company shall use its best
efforts to cause such tender offer to be extended on the
same terms and conditions to the share of Preferred
Stock.
-2-
EXHIBIT B
EXAMPLE OF PARTIAL EXERCISE OF
PUT IN CONNECTION WITH FINANCING
Suppose the Company: (i) issues to investors an aggregate of 11,111,111 shares
of its Common Stock at $3.00 per share in a financing; and (ii) has 100,000,000
shares outstanding at the time of the financing.
Exercise of Put
---------------
Then @viso may exercise the Secondary Put Option as follows:
11,111,111 shares issued in financing
---------------------------------------------------------- = 10%
111,111,111 shares outstanding post-financing
So @viso may exercise the Secondary Put Option with respect to 10% of the
current Secondary Put Conversion Value, or $65,000,000 multiplied by 10% =
$6,500,000. Accordingly @viso will receive $6,500,000 worth of PeoplePC Inc.
stock valued at $3.00 per share,
or 6,500,000 = 2,166,667 shares
---------------------
3
Post-Exercise Adjustments
-------------------------
The Secondary Put Conversion Value: will be reduced by the aggregate value of NV
Shares sold to the Company, or $6,500,000, to $58,500,000.
The Primary Put Share Number will be reduced by 10%:
Assuming X equals 13,965,429 (6,500,000) = 1,396,543
-----------
(65,000,000)
The Cap will not be adjusted, but the 1,396,543 shares issued in the financing
will count toward reaching the Cap.
