EXHIBIT 10.2
AGREEMENT
This AGREEMENT (the "Agreement") is entered into as of this 30th day of
September, 2000, by and between TurboNet Communications ("TurboNet"), a
California corporation and Lotus Pacific, Inc., a Delaware corporation
("LPFC").
Recitals
A. Effective March 15, 1999, Lotus and TurboNet entered into a certain
Acquisition Agreement (the "Acquisition Agreement"), which was subsequently
amended pursuant to an Addendum to Acquisition Agreement (the "Addendum"),
dated as of March 31, 1999.
B. Section 3 of the Addendum provides that TurboNet shall use its good
faith efforts to cause each holder of employee stock options issued under
TurboNet's 1998 Stock Option Plan to assign eighty-one percent (81%) of the
shares underlying such options (each an "Option Share" and collectively, the
"Option Shares") to LPFC concurrent with the exercise of such options, in
return for 0.5364 shares (the "Operative Ratio") of LPFC common stock for each
Option Share so assigned.
D. In anticipation of the assignment of the Option Shares, LPFC has
previously delivered to TurboNet two certificates (the "Preliminary
Certificates") registered in the name of TurboNet, representing an aggregate
of 1,454,459 shares of LPFC common stock issuable in exchange for the Option
Shares.
E. Section 4 of the Addendum obligates LPFC to provide working capital
funds to TurboNet in the aggregate amount of Twenty Million Dollars
($20,000,000) in exchange for the issuance by TurboNet of convertible
promissory notes (the "Working Capital").
F. Pursuant to the terms of a Share Exchange Agreement dated March 31,
1999 and a Share Exchange Agreement dated May 18, 1999 among LPFC and certain
shareholders of TurboNet, no shares of LPFC common stock issued to TurboNet
shareholders may be sold (the "Restrictions") until such time as TurboNet's
gross revenue in any fiscal year is greater than Thirty Million U.S. Dollars
($30,000,000), with pre-tax net profits for such fiscal year of at least Six
Million U.S. Dollars ($6,000,000) (the "Milestones").
G. LPFC and TurboNet desire to amend the Acquisition Agreement and to
clarify certain points regarding the Restrictions as set forth herein.
THEREFORE, in consideration of the mutual promises made in this Agreement,
the parties, intending to be legally bound, hereby agree as follows:
1. Options. TurboNet represents and warrants that each person listed on
Schedule A hereto has agreed to transfer 81% of the shares of TurboNet common
stock issued in respect of an exercise of the currently outstanding stock
options set forth opposite each person's name on Schedule A (the "Dual
Options"), to LPFC, in exchange for shares of LPFC common stock as determined
by the Operative Ratio. In addition, TurboNet is delivering herewith or has
previously delivered to LPFC, certificates representing 143,350 shares of
TurboNet common stock issued in respect of already exercised Option Shares.
In reliance upon the foregoing representations, LPFC agrees and acknowledges
that the Dual Options together with option shares previously transferred to
LPFC upon exercise of option shares represent full satisfaction of the
obligations of TurboNet under Section 3 of the Addendum and that TurboNet
shall have no further obligation to use its good faith efforts to cause holders
of TurboNet options to assign to LPFC 81% of the shares of TurboNet common
stock issuable upon exercise of such options in exchange for shares of LPFC
common stock. In addition, the parties recognize that certain of the Dual
Options may terminate by reason of expiration or cancellation in accordance
with their terms prior to their exercise. LPFC agrees that in the event any
of the Dual Options are not exercised for any reason, LPFC shall not be
entitled to receive shares of TurboNet common stock which would otherwise
have been transferred if such Dual Option been exercised.
2. Option Certificates. Based upon the agreements made by LPFC herein,
TurboNet is herewith returning the Preliminary Certificates to LPFC, duly
endorsed for transfer, and TurboNet and LPFC acknowledge and agree that such
certificates will be cancelled and the shares of LPFC common stock evidenced
thereby will be returned to the status of authorized and unissued shares.
3. Delivery of LPFC Shares. TurboNet covenants and agrees that upon
each exercise of a Dual Option, it will promptly deliver to LPFC written notice
of such exercise and deliver to LPFC certificates registered in the name of
LPFC (or in the name of the holder, accompanied by such executed stock powers
and other instruments as may be required to transfer and vest in LPFC ownership
of such shares free and clear of any liens, claims, charges or encumbrances
whatsoever) representing 81% of the TurboNet shares underlying the exercised
Dual Option; provided, however, that such delivery to LPFC shall be made only
against receipt by the holder of such exercised Dual Option from LPFC of
certificates registered in the name of the holder representing the number of
newly issued shares of LPFC Stock equal to the product of the number of
TurboNet shares transferred to LPFC multiplied by the Operative Ratio. All
certificates for TurboNet shares delivered to LPFC and all certificates for
shares of LPFC common stock delivered to the holder of an exercised Dual Option
pursuant to this provision shall be issued in compliance with the requirements
of the Securities Act of 1933, as amended, (the "Securities Act") and shall
bear the legend relating to restrictions on transfer pursuant to the 1933 Act
which is described in the first sentence of Section 4 of the Acquisition
Agreement. Certificates for LPFC Stock so delivered shall not be subject to
the Restrictions, or be required to bear the legend relating to, the
Restrictions.
4. Waiver of Working Capital. Pursuant to Section 4 of the Addendum,
LPFC has previously provided to TurboNet $10,000,000 of the Working Capital.
TurboNet hereby agrees to waive the obligation of LPFC to provide the second
transfer of $10,000,000 under the Addendum.
5. Waiver of Restrictions; Removal of Legends. LPFC hereby acknowledges
for the benefit of TurboNet, the TurboNet shareholders who are holders of Lotus
common stock and the holders of the Dual Options (collectively, the "Dual
Shareholders"), that, effective as of August 31, 2000, the Milestones have been
met and the Restrictions are hereby removed. LPFC agrees that upon delivery
of the certificates representing the shares of LPFC common stock subject to the
Restrictions, it will promptly reissue certificates representing such shares
without the legend setting forth the Restrictions.
6. Registration of LPFC Shares. LPFC agrees for the benefit of TurboNet
and the Dual Shareholders, that within three (3) months after execution of this
Agreement, it will cause an appropriate registration statement (the
"Registration Statement") under the Securities Act, to be filed and to use its
best efforts to cause such Registration Statement to be declared effective ,
covering the resale by the Dual Shareholders of all LPFC common stock which may
be issued after such filing, in respect of the exercise of the Dual Options,
provided that LPFC's obligations are subject to the obligation of TurboNet and
the Dual Shareholders to furnish such information as may be required to comply
with the requirements of the Securities and Exchange Commission (the
"Commission"). LPFC agrees that it shall use its best efforts to keep the
Registration Statement effective until such time as all shares of LPFC issued
in respect of the Dual Options have either been disposed of by the Dual
Shareholders or until such time as such shares could be sold under Rule 144(k)
(or its successor), under the Securities Act. LPFC further agrees that it
shall pay all expenses incurred in connection with such registration.
7. Fully Paid Shares. LPFC represents and warrants to TurboNet for the
benefit of TurboNet and the holders of the Dual Options that the shares of
LPFC Stock to be delivered to the Dual Shareholders pursuant to this Amendment
shall upon such delivery be duly authorized, validly issued, fully paid and
nonassessable shares of LPFC's common stock and shall be free and clear of any
liens, claims, charges or encumbrances arising by reason of any act or
agreement of LPFC (other than restrictions on transfer arising pursuant to the
requirements of the Securities Act). TurboNet represents and warrants to LPFC
that the TurboNet shares to be delivered to LPFC pursuant to this Amendment
shall upon such delivery be duly authorized, validly issued, fully paid and
nonassessable shares of TurboNet's common stock and shall be free and clear of
any liens, claims, charges or encumbrances arising by reason of any act or
agreement of TurboNet (other than restrictions on transfer arising pursuant to
the requirements of the Securities Act).
8. General Waiver. LPFC and TurboNet, their assigns and successors,
fully and forever release and discharge each other and each of their current,
former and future parents, subsidiaries, related entities, officers, directors,
shareholders, agents, attorneys and assigns (collectively, "Releasees"), with
respect to any and all claims and causes of action, of every nature, kind and
description, in law, equity or otherwise, which have arisen, occurred or
existed at any time prior to the signing of this Agreement, including, without
limitation, any and all claims, liabilities and causes of action arising out of
or relating to TurboNet's obligations to deliver shares of its capital stock
under the Acquisition Agreement, except for shares actually issuable upon
exercise of the Dual Options to LPFC and shares actually delivered as of the
date of this Agreement to LPFC.
9. Waiver of Civil Code No. 1542. TurboNet and LPFC expressly waive any
and all rights and benefits conferred upon them by Section 1542 of the Civil
Code of the State of California, which states as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
TurboNet and LPFC expressly agree and understand that the releases given by
them pursuant to this Agreement apply to all unknown, unsuspected and
unanticipated claims, liabilities and causes of action which they may have
against one another or any of the other Releasees.
10. Further Assurances. Each of the parties shall do, or cause to be
done, all things necessary, proper or advisable under applicable law to carry
out the provisions of this Agreement and shall execute and deliver such other
and further documents and other papers as may be required to give effect to the
provisions of this Agreement.
11. Voluntary Execution. The parties hereby acknowledge that they have
read and understand this Agreement and that they sign this Agreement
voluntarily, without coercion, and based upon their own judgment and not in
reliance upon any representations or promises made by the other party, other
than those contained within this Agreement. The parties further agree that
if any of the facts or matters upon which they now rely in making this
Agreement hereafter prove to be otherwise, this Agreement will nonetheless
remain in full force and effect.
12. Delaware Law. The parties agree that this Agreement and its terms
shall be construed under Delaware law.
13. Venue. The parties agree that all disputes and claims arising from
this Agreement must be brought in the United States in a Delaware state court
in and for the County of New Castle or in the United States District Court for
the District of Delaware.
14. Drafting. The parties agree that this Agreement shall be construed
without regard to the drafter of the same and shall be construed as though each
party to this Agreement participated equally in the preparation and drafting
of this Agreement.
15. Headings Are Not Controlling. The headings used in this Agreement are
for the purpose of organization only and are not intended to inform, alter, or
control the terms of this Agreement.
16. Facsimile Signature. Facsimile signatures on this Agreement shall be
treated as original signatures.
17. Counterparts. This Agreement may be signed in counterparts, and such
counterparts shall be treated as though signed as one document.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first written above.
LOTUS PACIFIC, INC.
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, President
TURBONET COMMUNICATIONS
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, President
