EXHIBIT 10.2
Memorandum of Understanding
This memorandum of understanding ("Memorandum") is intended to clarify and
further document an agreement regarding the ownership interests in the Sold-Rite
project ("Project") and the subsidiary company structures which are associated
with that Project, previously reached among the members of the TM Century Board
of Directors ("Board") on July 31, 2002 ("Agreement"). It is the intention of
each Board Member to fully disclose to all relevant parties, all aspects of this
Agreement.
On July 31, 2002, the Board, in executive session, discussed various alternative
paths of action with respect to ownership and collateral commitments regarding
this Project and the relative merits of each alternative. It was determined by
the Board that the following determinations listed below are agreed upon, are
deemed to be fair to all parties, and are in the best interest of TM Century and
its shareholders. In the case of votes taken or approvals granted in this
matter, both Xxxxx Xxxxxxxx and Xxxxxxx Xxxx abstained from voting.
1. Initial ownership interest in the Sold-Rite project shall be as follows:
42.5% owned by TM Century
42.5% owned by Xxxxx Xxxxxxxx
15% owned by Xxxxxxx Xxxx
2. It is understood that this Project is to be set up in a subsidiary intended
to limit TM Century's liability. Although set up as a subsidiary, it is not the
intention of the Board to do this in order to misdirect, deceive or hide
information from the shareholders, the public or any governmental agency. It is
further agreed that funds provided by TM Century with respect to this project
will be limited to $100,000. A decision to fund the Project beyond that point
would require specific approval of the Board.
3. It is understood that in order to raise capital to fund the new venture, to
attract management and other employees, and to bring in various strategic
partners who may provide other forms of value critical to the success of the
venture, additional ownership interests or options, or warrants thereto, will be
created. It is understood that dilution of ownership can be expected to result
from that, and that all such dilution will be ratable; that is, all three
initial owners interests will be diluted by some equal percentage of their
initial ownership. For example, if another party acquired a 50% interest in the
project, the ownership by each of the initial owners would be cut in half.
4. It is agreed that patents may be issued regarding this project and that
ownership of such patents shall be assigned to TM Century.
5. The Board believes it is in the interest of the company and its shareholders
to maintain the services of Xxxxx Xxxxxxxx as President of TM Century. While Xx.
Xxxxxxxx can be expected to apportion some percentage of his time to pursuing
the Project, Xx. Xxxxxxxx agrees to limit that time such that the ongoing
operations of TM Century, which he oversees, will not suffer. It is fully
expected that the Project will eventually have its own leadership and will be
able to relieve Xx. Xxxxxxxx'x time to Sold-Rite in favor of TM Century
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operations. In all cases, Xx. Xxxxxxxx agrees to not allow any such commitments
to Sold-Rite to adversely affect TM Century operations.
6. The Board wishes to maintain Xx. Xxxx'x services as a TM Century Board
Member, and since the interests of all three initial owners are fully aligned
perceives no significant conflict of interest regarding TM Century's interest
created by his ownership interest in Sold-Rite. The Board acknowledges that Xx.
Xxxx'x role in Sold-Rite has been, and is expected to continue to be as a
contributor and advisor but not as an employee. Xx. Xxxx currently receives no
salary or benefits from either TM Century or Sold-Rite other than options for TM
Century stock and the ownership in Sold-Rite. It is acknowledged that if Xx.
Xxxx takes on a more active role in Sold-Rite, he will probably earn a salary
and/or additional stock or options in Sold-Rite. Even then, since all equity
interests in Sold-Rite would be aligned, no conflict of interest would be
inherent so long as his Sold-Rite duties would not inhibit his ability to act as
a TM Century Director. Nevertheless, Xx. Xxxx will continue to abstain from
voting as a TM Century board member on all matters that might create a conflict
or perceived conflict of interest. Furthermore, Xx. Xxxx agrees to resign from
the TM Century board should the TM Century board request such resignation for
any reason whatever.
7. The Board has received advice and an opinion letter from the Company's
corporate counsel indicating that the agreement to apportion Xxxxx Xxxxxxxx and
Xxxxxxx Xxxx a direct share of the Sold-Rite project should not be considered to
be suborning a corporate opportunity, and therefore, so long as the Agreement is
fully disclosed to shareholders, should not be seen to create undue exposure to
a shareholder suit. The Board intends to fully disclose all relevant information
regarding Sold-Rite ownership or collateral agreements to all relevant entities,
and believes that the Agreement is fair to all parties, does not suborn
corporate opportunity, and is in the best interest of TM Century and its
shareholders.
The Agreement upon which this Memorandum of Understanding is based shall be
effective July 31, 2002.
Dated: December 9, 2002
/s/: Xxxxxxxx XxXxxxxx /s/: A. Xxx Xxxxxxxxx
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Xxxxxxxx XxXxxxxx, Chairman A. Xxx Xxxxxxxxx, Director
/s/: Xxxxx X. Xxxx /s/: R. Xxxxx Xxxxxxxx
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Xxxxx Xxxx, Director R. Xxxxx Xxxxxxxx, President and Director
/s/: Xxxxxxx Xxxx
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Xxxxxxx Xxxx, Director
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