13 August 2001
Xxxxxx Xxxxxx
Chief Executive Officer
Fanlink Networks, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Dear Xxx:
This letter will document Planet Zanett, Inc.'s offer to
continue its involvement in Fanlink Networks, Inc. ("the
Company").
Reference is hereby made to that certain Series A Convertible
Preferred Stock Purchase Agreement, dated December 18, 2000 (the
"SPA"), pursuant to which Planet Zanett, Inc. ("PZ") purchased
shares of Series A Convertible Preferred Stock ("Series A
Stock") from the Company in up to three tranches, the last of
which tranche is referred to herein as the "Final Tranche".
We hereby offer the following regarding the Final Tranche:
1. Series A Stock. The Company shall issue to PZ an
aggregate of 3,369,863 shares of Series A Stock (with
the same rights and privileges of previously issued
Series A Stock pursuant to the SPA) in exchange for
the Final Tranche disbursements, as detailed below.
2. Warrant Cancellation. PZ shall return for
cancellation to the Company a Warrant for 1,394,031
shares of Common Stock of the Company.
At the conclusion of steps 1 and 2, PZ shall be the
beneficial owner of 35.0% of the issued and outstanding
share capital of the Company, on a fully diluted basis.
3. Disbursements. PZ shall disburse the Final Tranche
based on the documented roll-out schedule of the
fanlink network and associated cost projections
provided by the Company. Specifically, PZ shall
disburse within the period of 20 to 30 days prior to
the disclosed launch dates. Use of the proceeds by
the Company shall be limited to launch projects and
necessary operating expenses of the Company. The
first disbursement will be made upon acceptance of
these terms. In the event of additional financing
from a third party subsequent to the first
disbursement, Xxxxxx retains the right to disburse,
under the terms described above, the difference of
$492,000 and the disbursements made up to the date of
the third party financing.
This letter assumes the accuracy and completeness of the
information previously provided by you, and assumes no material
adverse change in financial condition or business prospects of
the Company.
This letter is delivered to you with the understanding and on
the condition that neither the letter nor its substance shall be
disclosed publicly or privately, except with the prior oral
permission of The Zanett Group.
By counter-signing where indicated below, you will have
signified your acceptance of the terms of our offer and this
letter so executed will create valid and legally binding
obligations on your part and our part.
Sincerely,
Planet Zanett, Inc.
By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Chief Financial Officer
Xxxxxx to and accepted as of this 13th day of August, 2001
Fanlink Networks, Inc.
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Chief Executive Officer
