EXHIBIT A
SYNTHONICS
EQUITY AGREEMENT - SUMMARY OF TERMS
o PRICE
1/ Xxxx Xxxxxx (the "Investor") to purchase 2,300,000 shares of
Synthonics ("the Company") common stock at $ .10 per share, for a
total purchase price of $230,000, payable in cash at time of closing.
Prior to the issuance of this 2.3 million shares, the Company
represents there are 33,041,862 fully diluted shares outstanding.
2/ These shares are fully vested to Investor, and will be issued as
unregistered shares but will otherwise have all rights and privileges
associated with such common stock. The Investor will be restricted
from transferring these shares for a period of twelve months from the
date herein; provided, however, the Investor may transfer these shares
to his affiliates or affiliated companies provided such affiliates
adhere to the provisions of this term sheet; after twelve months from
the date hereof, the Investor shall have the right to sell its shares,
however, the Company will have the right of first refusal to purchase
such shares at the price and on the same terms and conditions obtained
by the Investor.
o USE OF PROCEEDS
1/ The proceeds will be used primarily for the development of, and
infrastructure to support, the Digital Mannequin program, including
the hiring of certain programmers and the development of the Digital
Mannequin marketing program. However, some funds will be used for the
purchasing of industry research and other working capital
requirements.
o RELATED STRATEGIC AGREEMENTS
1/ As part of this relationship, the Company agrees that it will give
Future Media the exclusive right, based on prevailing market prices,
with respect to the Company's CD-ROM replication needs where the
Company controls the choice of such vendor. This includes any
replication business arising from its licensing, niche business
segments or Internet platform business. This business will be Future
Media's option and in line with customary competitive market pricing.
The Company will negotiate a separate agreement with Future Media
regarding this replication business, such agreement in the form
utilized by Future Media with its other customers.
2/ As part of this share purchase, Future Media and the Company will
collaborate on a joint marketing program and presentation targeted at
the direct mail apparel companies. This program will include
development and positioning of the Digital Mannequin, development and
positioning of a digital catalog program (to be distributed on CD-ROM)
and the development
and positioning of a program that "links" the digital mannequin and
digital catalog programs for the direct mail manufacturer.
As part of this program, the Company and Future Media will develop a
joint calling effort targeting the direct mail industry. The aim will
be for the digital mannequin and marketing programs to be developed
within the next thirty days, for presentation to the industry
thereafter. The costs incurred directly associated with this marketing
program will be paid for by the Company; however, the Company will not
be responsible for covering expenses of Future Media or its personnel
with respect to the development, marketing or retention of the
replication business.
3/ Any proceeds from the Digital Mannequin/Digital Catalog program are
for the full benefit of the Company and not to be shared with Investor
or any affiliates of Investor, other than through participation of its
equity stake. Any proceeds from the replication associated with such
programs will be for the full benefit of Future Media.
o OTHER AGREEMENTS
1/ Future Media will provide the services of its chief financial officer,
Xxx Xxxxx, to act as the Company's principal financial officer for the
next twelve months; Xx. Xxxxx will devote up to two days per week at
or on behalf of the Company, in order to establish the Company's
internal financial operations, oversee the audit process with the
Company's outside auditors and provide general financial advice when
required. This service will be provided as part of the equity
investment with no additional charge to the Company until such time as
the Company completes its current round of private financing in which
the Company plans to raise an additional $3-5 million in equity.
Subsequent to the earlier of (1) raising of this equity or (2) 150
days from the date of this agreement, the Company will reimburse
Future Media on a monthly basis for Xx. Xxxxx' actual time spent at or
on behalf of the Company. These charges will not be retroactive and
will be billed at Future Media's actual cost.
2/ The Investor will have the option to purchase an additional 1,371,320
shares at a purchase price of $137,132 (per share purchase price of
$.10). This option is fully vested upon the signing of this agreement
and the purchase of the 2,300,000 common shares discussed above. The
option will be outstanding for the later of (1) 90 days from the close
of the current round of equity being raised or (2) 150 days from the
date of this agreement. In addition the Investor will have the right
to purchase stock in the current round of financing being raised
sufficient to maintain the Investor's 10% share of outstanding common
stock in the Company. This purchase option will be at the same price
or average price per common share that is obtained in that round of
financing.
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3/ The Company will have the right to disclose this term sheet and its
provisions to potential investors currently being contacted with
respect to the current round of financing, or as otherwise required by
law.
4/ The Investor, or any person or entity controlled by the Investor,
agrees not to purchase any additional shares of common stock, without
the permission of the Board of Directors of the Company, in open
market or other transactions which would raise the Investor's share of
the common stock in excess of 10% of the outstanding shares, on a
fully diluted basis, at the time, provided, however, the Investor will
be allowed through open market or other private transactions to
acquire an additional 10% of the outstanding shares provided the
Investor (1) gives advance notice of such purchases to the Company's
Board of Directors and (2) executes an agreement stating such
purchases are for investment purposes only and the Investor will take
no action to acquire control of the Company.
5/ The Investor will have the right to nominate one member to the
Company's Board of Directors. However, such nominee must be approved
by the Company, such approval not being unreasonably withheld. The
Investor will have information rights equivalent to that of a board
member of the Company. All information must be kept confidential.
6/ The Company will provide the Investor with a complete list of patents
obtained and patents pending. The Company represents there are no
outside claims against the Company with regard to the patents issued.
The Company also represents there is no outstanding litigation against
the Company as of the date herein.
7/ The Investor will be granted "piggy-back" rights on shares issued by
the Company provided that such rights will be subject to any
underwriter cutbacks or holdbacks and will be granted pro rata along
with any other selling shareholders.
8/ The Company will provide the Investor with an opinion of counsel that
the shares of the Company are validly issued and what the
capitalization is as of the date of the last financial statements.
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o CLOSING
1/ The closing to be completed on or before Wednesday, June 2, 1999.
ACCEPTED AND AGREED TO:
/s/ XXXX XXXXXX
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Xxxx Xxxxxx
/s/ X. XXXXXXX XXXX
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Synthonics Technologies
6/2/99
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Date
ASSIGNMENT
This ASSIGNMENT, dated as of June 2, 1999 (this "Assignment"), is entered
into by Xxxx Xxxxxx ("Xxxxxx") for the benefit of Argoquest 7, LLC, a Delaware
limited liability company ("LLC").
WHEREAS, pursuant to that certain equity agreement summary of terms, dated
as of June 2, 1999 (the "Term Sheet"), between Xxxxxx and Synthonics
Technologies, Inc., a Utah corporation ("Synthonics"), Xxxxxx has acquired the
right to obtain certain equity interests in Synthonics, together with certain
other rights as set forth therein.
WHEREAS, Xxxxxx desires to assign all of his rights under the Term
Sheet to LLC;
NOW, THEREFORE, Xxxxxx hereby assigns all rights, title and interest in
and to the Term Sheet to LLC.
IN WITNESS WHEREOF, Xxxxxx has caused this Assignment to be executed as of
this 2nd day of June, 1999.
/s/ XXXX XXXXXX
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Xxxx Xxxxxx
Acknowledged and Accepted:
ARGOQUEST 7, LLC
/s/ XXXX XXXXXX
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By: Xxxx Xxxxxx
Title: Manager
