Exhibit # 10.18
Convertible Note - T. Baba & addendum
COMPETITIVE COMMUNICATIONS INC.
A California Corporation
Addendum I
To A Secured Note
The Secured Notes ("Note") dated 2/5/98 and 3/24/98 for the aggregate amount of
$39,083.67 (inclusive of all accrued interest through 11/30/99) between
COMPETITIVE COMMUNICATIONS, INC., now a wholly owned subsidiary of COMPETITIVE
COMPANIES, INC., a Nevada. Corporation (hereinafter referred to as "Maker"), and
T. Baba & Co. (hereinafter referred to as "Holder") is hereby modified as
follows.
Maker hereby offers and Holder hereby accepts to receive for full consideration
and payment for the Note, common stock shares of COMPETITIVE COMPANIES, INC. at
the price of $1.00 per share. This is in lieu of all other consideration
specified in the Note including the 40% discount price off the opening price of
the stock.
In such case that the opening price per share is less than $3.00, Maker will
issue additional shares of common stock to Holder for the difference between the
opening price per share (if less than $3.00) and $3.00. (As an example: If the
current Note is $10,000.00. Maker will upon receipt of this signed Addendum
immediately issue 10,000 shares to Holder. If the opening price is $2.00, Maker
will issue Holder an additional 10,000 shares to bring the total value of shares
(at $1.00 per share value) to $3.00 per share.)
It is further agreed that should COMPETITIVE COMPANIES, INC. fail to file its
application with the SEC to become a publicly trading company prior to January
1, 1999, Holder, at Holder's sole discretion, may nullify this Addendum and
revert to the original terms of the Note by notifying Maker in writing on or
before January 31, 2000. Should there arise any discrepancy between the Note and
this Addendum, this Addendum shall take precedence.
IN WITNESS WHEREOF, the Maker and Holder have executed this Addendum 1 to the
aforementioned Secured Note on the date first written below.
HOLDER MAKER
T. BABA & CO. COMPETITIVE COMPANIES, INC. &
COMPETITIVE COMMUNICATIONS INC.
----------------------- ----------------------------------
(Signature) (Signature)
XXXXXX SERA / T. BAGA__& CO__________________David Xxxxx
(Print Name)
_PARTNER__________________________________ Chairman & CEO
(Title)
11-29-99
(Date)
COMPETITIVE COMMUNICATIONS INC.
Modification. to
"A Five Year Secured Note"
Subscription Documents
Dated December 19, 1997
Warranties and Guarantees Attached to CCI Secured Note, page 5, paragraphs 3a
and 3b are modified as follows as of March 27, 1998, and supercedes and replaces
the Modifications dated February 12, 1998, and February 1, 1998. This
modification is retroactive and offered to all investors who invested in the
subject Note prior to and after the effective date.
Said paragraphs are replaced in whole by the following:
3. As an additional option and in the case of CCI becoming a public entity or if
CCI is sold to a public company paragraphs 3a and 3b shall apply. Otherwise, If
CCI is sold to private investors or a private company (non-public entity): (1)
Note Holders who receive monthly interest payments will receive an additional
10% of the amount of their note upon repayment, or (ii) Note Holders who defer
(accrue) monthly interest will receive an additional 20% of the amount of their
note upon repayment.
a. Convert the Note plus accrued interest (if deferment of accrued
interest is requested in writing by Holder and agreed to by Maker) to
an amount of common stock in the Corporation that will be determined as
follows:
Amount Discounted off the Offering or Sell Price
Amount of Not
If Monthly Interest If Monthly Interest
Payments Are Taken Is Deferred (Accrued)
$ 10,000 - S49,999.99 10% 25%
S50,000 - S99,999.99- 20% 35%
$100,000.00 - S249,999.99 30% 45%
$250,000.00 - $499,999.99 40% 55%
$500,000.00 and over 50% 65%
b. Buy at the above price an additional number of shares, but not more
than the like number realized by exercising this Option 3.
COMPETITIVE COMMUNICATIONS INC. INVESTOR(S)
--------------------------------- ------------------------------------
Signature Signature(s)
_DAVID XXXXX, CEO_________________ _THOMAS SERA/T. BABA & CO. __
Printed Name, Title Printed Name(s)
_____MAY 6, 1998___________________ MAY 7, 1998_________________________
Date Date(s)
COMPETITIVE COMMUNICATIONS INC.
Modification to
"A Five Year Secured Note'
Subscription Documents
Dated December 19, 1997
Warranties and Guarantees Attached to CCI Secured Note, page 5, paragraphs 3a
and 3b are modified as follows as of February 12, 1998, and supersedes and re
places the Modification dated February 1, 1998. This modification is retroactive
and offered to all investors who invested in the subject Note prior to the
effective date.
Said paragraphs are replaced in whole by the following:
3. As an additional option and only in the case of CCI becoming a public
entity.
a. Convert the Note plus accrued interest (if deferment of accrued
interest is requested in writing by Holder and agreed to by Maker) to
an amount of common stock in the Corporation that will be determined as
follows:
Amount Discounted
off the Offering Price
If Monthly Interest If Monthly Interest
Amount of Note Payments Are Taken Is Deferred (Accrued)
$10,000 - $49,999.99 10% 25%
$50,000 - $99,999-99 20% 35%
$100,000.00 - $249,999.99 30% 45%
$250,000.00 - $499,999.99 40% 55%
$500,000.00 and over 50% 65%
b. Buy at the above price an additional number of shares, but not more
than the like number realized by exercising this Option 3.
COMPETITIVE COMMUNICATIONS INC. INVESTOR(S)
--------------------------------- ------------------------------------
Signature Signature(s)
_DAVID KILNE, CEO ______________ XXXXXX SERA / T BABA & CO__________
Printed Name, Title Printed Name(s)
_MARCH _24, 1998_________________ MARCH 25, 1998______________________
Date Date(s)
COMPETITIVE COMMUNICATIONS INC.
XXXXX XXXXXXXX
INVESTMENT CONSULTANT
April 3, 1998
Xx. Xxxxxx Sera
X. XXXX & Co.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000-0000
Dear Mr. Sera:
Per your request, we are changing your First Secured Note to defer and
accumulate the interest for the higher discount off the offering price. This
will defer the monthly interest payments per the terms of the Secured Note as
changed by the February 12, 1998, modification.
Please, initial on page 4 and 5 as indicated and return the original to me. Xx.
Xxxxx has already initialed. I have dated the initialing as March 6, 1998, so
all interest accumulated from the last payment will be included Men calculating
the total interest. Also, I have enclosed a copy of page 4 with Xx. Xxxxx'x
initials for you to keep with your records.
Enclosed is an AIRBORNE EXPRESS envelope for the return of the initialed
original Subscription Documents for the First Secured Note.
Should you have any questions, please, do not hesitate to call me.
Sincerely,
Encl
COMPETITIVE COMMUNICATIONS INC.
Secured Note Subscription Agreement Questionnaire
Name(s) as appears on the 5 Year Secured Note: T BABA & CO
The undersigned hereby declares as follows:
I My overall commitment to investments which are not readily marketable is not
disproportionate to my net worth and my participation in the Note will not cause
such overall commitments to become excessive.
2. 1 have such knowledge and experience in financial and business matters that I
am capable of intelligently evaluating the merits and risks of participating in
the purchase of a secured note bearing interest at 15% on an annualized basis.
3. 1 have read the agreement and terms of the Note in its entirety, and
therefore, I understand its contents and agree to be bound by all of its terms.
4. 1 understand this Note is not a security, and therefore is not afforded the
protection under the Securities Act of 1933 or the Securities Act of 1934 (the
"Acts") or certain state securities laws, and I do not require the protections
afforded under the Acts.
5. 1 have the net worth and income indicated in the following questionnaire,
and as such, I am deemed to be an accredited investor.
6. As part of the consideration of this agreement, it is expressly agreed that
the proper court for litigation on any matter arising out of this agreement
shall be in Riverside County, California, and that all matters shall be
controlled by the laws of the State of California
By executing where indicated below, I have become a secured note holder
according to the terms of theNote which I have read and understood.
Total Amount to be Remitted 10,000.00 Social Security Number 00-000-0000
Print Name(s) (Individual/Joint Tenant(if applicable):
XXXXXX SERA _____________________________________
Signature(s):
--------------------------------------- -------------------------------------
Address: 0000 XXXXXXXX XXXX
Xxxx, Xxxxx, Xxx: XXXXXXXXXXX, XX 00000-0000 Date: 3-23-98
Home Phone: 000-000-0000 Work Phone: SAME
COMPETITIVE COMMUNICATIONS INC.
Secured Note Subscription Agreement Questionnaire
Continued
In order to assure that your Account Executive clearly and accurately portrayed
the purchase opportunity in the Note to you, CCI requires everyone to complete
and return this information survey.
Were you told that the assets of the Company secure the Note?
X YES NO
Do you understand that CCI intends to either sell the Company or capitalize it
by means of an IPO on or around December 31, 200 1, at which time the Note may
be called?
X YES NO
Do you understand that if you call the Note as the result of an IPO, you may
convert to common stock of the Corporation? Were the oral representations and
statements made by your Account Executive consistent with the written materials
provided to you?
X YES NO
If "NO" to any of the above, please explain-
Who was your Account Executive? XXXXXX X XXXXX
Investor Name if Corporate or Investor (If Individual or
other Entity Joint Tenants)
T BABA & CO______________________________ __________________________________
Print Name Print Name(s)
PARTNERSHIP______________________________ __________________________________
Type Entity Signature
------------------------------------------- ----------------------------------
Signature Signature of Joint Tenant
3-23-98______________________________________ __________________________________
Date Date
Approximate Annual Gross Income (including spouse's): 100,000.00
Approximate Net Worth (excluding home, furnishings and
automobiles): _______$ 150,000 ________S250,000_______-S350,000
X_______$500,000 _______________ S 1,000,000 or more
Prior Investments:
Number of years of investing in: 40 Common Stock 30 Bonds______Commodities
40 Mutual Funds 30
Limited Partnerships 40 General Partnerships ____ Other (specify):____________
Please give a brief description of your business knowledge and experience (use a
separate sheet if you need additional space):
Please indicate the frequency of your investments: X often occasionally
seldom never
COMPETITIVE COMMUNICATIONS INC.
A California Corporation
A Five Year Secured Note
Amount: 10,000.00
Date: March 23, 1998
FOR VALUE RECEIVED, COMPETITIVE COMMUNICATIONS INC. (hereinafter referred to as,
"Maker"), promises to pay to T BABA & CO., an individual/joint
tenants/corporation residing in CARPINTERIA (hereinafter the "Holder"), the sum
of $10,000.00 together with interest thereon-at the rate of 1.25% per month
aggregating to not more than 15% per annum, from the date hereof.
All principal and interest due hereunder shall be payable and shall be paid in
lawful money of the United States of America to the Holder at 0000 XXXXXXXX
XXXX, XXXXXXXXXXX, XX 0000-0000 or at such other place as the Holder shall have
designated to Maker in writing.
Each payment shall be credited first on the interest due and the remainder on
principal; interest shall thereupon cease upon the principal so credited. Should
interest not be paid, it shall thereafter bear like interest, as the principal,
but such unpaid interest so compounded shall not exceed an amount equal to is le
interest on the unpaid balance at the maximum permitted by law.
Unless Holder otherwise agrees by initialing below, Maker is obligated to make
interest only payments which shall be made on a monthly basis on the tenth day
of the month commencing thirty calendar days after the receipt of good funds and
continue for sixty months or until the Note is paid off or is called according
to provisions contained herein.
At the completion of sixty months or upon the Note's being called, all remaining
principal and interest are due. Should default of more than thirty days be made
in the payment of any installment of interest when due and if applicable, then
at the option of the Holder of this Note, the whole sum of principal and
interest shall become immediately due and payable.
This is a full recourse Note. This Note may not be changed orally, but only with
an agreement in writing and signed by the party to be charged therewith.
The attached Warranties and Guarantees are an explicit part of this Note, and
are included in the terms and conditions hereof.
Holder requests that the interest payments not be paid, and that the unpaid
interest shall become a part of the principal, and therefore bear like interest
as the principal.
COMPETITIVE COMMUNICATIONS INC. INVESTOR(S)
--------------------------------- ------------------------------------
Signature Signature(s)
_DAVID KILNE, CEO ______________ XXXXXX SERA / T BABA & CO__________
Printed Name, Title Printed Name(s)
_MARCH _24, 1998_________________ MARCH 23, 1998______________________
Date Date(s)
Warranties and Guarantees Attached to CCI Secured Note
These Warranties and Guarantees are an explicit part of the Note, and are
included in the terms and conditions thereof.
CCI wan-ants that it intends, on a best efforts basis, to either sell the
Corporation or become a public entity on or around December 31, 2001. If at that
time the Note remains open, the note holder may exercise one of the following
options:
1. Call the Note. at face value plus accrued interest (if applicable); or
2. Keep the Note to maturity (60) months; or
3. As an additional option and only in the case of CCI becoming a public
entity.
a. Convert the Note plus accrued interest (if deferment of
accrued interest is requested in writing by Holder and
agreed to by Maker) to an amount of common stock in the
Corporation that will be determined by dividing the Note
by the offering price, and
b. Buy at the offering price an additional number of shares,
but not more than the like number realized by exercising
this Option 3.
COMPETITIVE COMMUNICATIONS INC.
Secured Note Subscription Agreement Questionnaire
Name(s) as appears on the 5 Year Secured Note: T BABA & CO.
The undersigned hereby declares as follows:
I My overall commitment to investments which are not readily marketable is not
disproportionate to my net worth and my participation in the Note will not cause
such overall commitments to become excessive.
2. 1 have such knowledge and experience in financial and business matters that I
am capable of intelligently evaluating the merits and risks of participating in
the purchase of a secured note bearing interest at 15% on an annualized basis.
3. 1 have read the agreement and terms of the Note in its entirety, and
therefore, I understand its contents and agree to be bound by all of its terms.
4. 1 understand this Note is not a security, and therefore is not afforded the
protection under the Securities Act of 1933 or the Securities Act of 1934 (the
"Acts") or certain state securities laws, and I do not require the protections
afforded under the Acts.
5. 1 have the net worth and income indicated in the following questionnaire,
and as such, I am deemed to be an accredited investor.
6. As part of the consideration of this agreement, it is expressly agreed that
the proper court for litigation on any matter arising out of this agreement
shall be in Riverside County, California, and that all matters shall be
controlled by the laws of the State of California
By executing where indicated below, I have become a secured note holder
according to the terms of theNote which I have read and understood.
Total Amount to be Remitted 20,000.00 Social Security Number 00-000-0000
Print Name(s) (Individual/Joint Tenant(if applicable):
XXXXXX SERA ____________________________________
Signature(s):
---------------------------------- ------------------------------------
Address: 0000 XXXXXXXX XXXX
Xxxx, Xxxxx, Xxx: XXXXXXXXXXX, XX 00000-0000 Date: 1-29-98
Home Phone: 000-000-0000 Work Phone: SAME
COMPETITIVE COMMUNICATIONS INC.
Secured Note Subscription Agreement Questionnaire
Continued
In order to assure that your Account Executive clearly and accurately portrayed
the purchase opportunity in the Note to you, CCI requires everyone to complete
and return this information survey.
Were you told that the assets of the Company secure the Note?
X YES NO
Do you understand that CCI intends to either sell the Company or capitalize it
by means of an IPO on or around December 31, 200 1, at which time the Note may
be called?
X YES NO
Do you understand that if you call the Note as the result of an IPO, you may
convert to common stock of the Corporation? Were the oral representations and
statements made by your Account Executive consistent with the written materials
provided to you?
X YES NO
If "NO" to any of the above, please explain-
Who was your Account Executive? XXXXXX X XXXXX
Investor Name if Corporate or Investor (If Individual or
other Entity Joint Tenants)
T BABA & CO______________________________ ______________________________
Print Name Print Name(s)
PARTNERSHIP______________________________ ______________________________
Type Entity Signature
------------------------------------------- ------------------------------
Signature Signature of Joint Tenant
1-29-98______________________________________ ______________________________
Date Date
Approximate Annual Gross Income (including spouse's): 100,000.00
Approximate Net Worth (excluding home, furnishings and
automobiles): _______$ 150,000 ________S250,000_______-S350,000
X_______$500,000 _______________ S 1,000,000 or more
Prior Investments:
Number of years of investing in: 40 Common Stock 30 Bonds______Commodities
40 Mutual Funds 30
Limited Partnerships 40 General Partnerships ____ Other (specify):____________
Please give a brief description of your business knowledge and experience (use a
separate sheet if you need additional space):
Please indicate the frequency of your investments: X often occasionally
seldom never
COMPETITIVE COMMUNICATIONS INC.
A California Corporation
A Five Year Secured Note
Amount: 20,000.00
Date: January 29, 1998
FOR VALUE RECEIVED, COMPETITIVE COMMUNICATIONS INC. (hereinafter referred to as,
"Maker"), promises to pay to T BABA & CO., an individual/joint
tenants/corporation residing in CARPINTERIA (hereinafter the "Holder"), the sum
of $2,000.00 together with interest thereon-at the rate of 1.25% per month
aggregating to not more than 15% per annum, from the date hereof.
All principal and interest due hereunder shall be payable and shall be paid in
lawful money of the United States of America to the Holder at 0000 XXXXXXXX
XXXX, XXXXXXXXXXX, XX 0000-0000 or at such other place as the Holder shall have
designated to Maker in writing.
Each payment shall be credited first on the interest due and the remainder on
principal; interest shall thereupon cease upon the principal so credited. Should
interest not be paid, it shall thereafter bear like interest, as the principal,
but such unpaid interest so compounded shall not exceed an amount equal to the
interest on the unpaid balance at the maximum permitted by law.
Unless Holder otherwise agrees by initialing below, Maker is obligated to make
interest only payments which shall be made on a monthly basis on the tenth day
of the month commencing thirty calendar days after the receipt of good funds and
continue for sixty months or until the Note is paid off or is called according
to provisions contained herein.
At the completion of sixty months or upon the Note's being called, all remaining
principal and interest are due. Should default of more than thirty days be made
in the payment of any installment of interest when due and if applicable, then
at the option of the Holder of this Note, the whole sum of principal and
interest shall become immediately due and payable.
This is a full recourse Note. This Note may not be changed orally, but only with
an agreement in writing and signed by the party to be charged therewith.
The attached Warranties and Guarantees are an explicit part of this Note, and
are included in the terms and conditions hereof.
Holder requests that the interest payments not be paid, and that the unpaid
interest shall become a part of the principal, and therefore bear like interest
as the principal.
COMPETITIVE COMMUNICATIONS INC. INVESTOR(S)
--------------------------------- ------------------------------------
Signature Signature(s)
_DAVID KILNE, CEO ______________ XXXXXX SERA / T BABA & CO__________
Printed Name, Title Printed Name(s)
_February 5, 1998_________________ January 29, 1998____________________
Date Date(s)
Warranties and Guarantees Attached to CCI Secured Note
These Warranties and Guarantees are an explicit part of the Note, and are
included in the terms and conditions thereof.
CCI wan-ants that it intends, on a best efforts basis, to either sell the
Corporation or become a public entity on or around December 31, 2001. If at that
time the Note remains open, the note holder may exercise one of the following
options:
1. Call the Note. at face value plus accrued interest (if applicable); or
2. Keep the Note to maturity (60) months; or
3. As an additional option and only in the case of CCI becoming a public
entity.
a. Convert the Note plus accrued interest (if deferment of
accrued interest is requested in writing by Holder and
agreed to by Maker) to an amount of common stock in the
Corporation that will be determined by dividing the Note
by the offering price, and
b. Buy at the offering price an additional number of shares,
but not more than the like number realized by exercising
this Option 3.
COMPETITIVE COMMUNICATIONS INC.
A California Corporation
A FIVE YEAR SECURED NOTE
SUBSCRIPTION DOCUMENTS
December 19, 1997
DO NOT REPRODUCE-STRICTLY CONFIDENTIAL
The information set forth herein is confidential and is intended for those to
whom it is transmitted by the Company. Any reproduction of this material, in
whole or part, or the divulgence of any of its contents, without prior written
consent of the Company is prohibited. Neither this document, nor any portion
thereof, is intended as an offer to sell, or to solicit an offer to buy any
security; nor is it a prospectus for a proposed corporation. It is solely for
information purposes. No other purpose or use whatsoever is implied or intended.
INSTRUCTIONS ON HOW TO SUBSCRIBE
PLEASE COMPLETE TWO ORIGINALS OF THE FOLLOWING:
1. COMPLETE and SIGN the Secured Note Subscription Agreement Questionnaire.
2. COMPLETE and SIGN where designated the Five Year Secured Note. (Upon receipt,
the Company will compete its portion and return an original to you.)
3. INITIAL by all investors on pages which have an "Initial IT ere" space at the
bottom xxxxx.
4. MAKE your check payable in minimum increments of Ten Thousand Dollars
($10,000) as follows:
COMPETITIVE COMMUNICATIONS INC. - SECURED NOTE
5. RETURN check and TWO complete sets of the Subscription Documents (which
includes the Secured Note Subscription Agreement and the Five Year Secured Note)
via express courier to the following address:
COMPETITIVE COMMUNICATIONS INC.
ATTN: Xxxxx Xxxxx, CEO
00000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxx, XX 00000
6. Qualified XXX
If necessary, contact your Account Executive for XXX documents. The IRA
administrator will send out the necessary documents directly to you
with the appropriate instructions.
7. Wire Transfer
If necessary, contact your Account Executive for wire transfer
instructions.
