April 2, 1998
Xxxxxxx Equities
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
("Bridge Lender")
Re: Bridge Loan to PICK Communications, Corp.
Dear Bridge Lender:
This letter agreement will confirm our understanding and agreement with respect
to the proposed bridge loan (the "Bridge Loan") in the principal amount of
$1,000,000 to be made by you and certain others (the "Lenders," or individually,
the "Lender") to the undersigned, PICK Communications, Corp., a Nevada
corporation (the "Borrower"), and is entered into in order to induce you to make
the Bridge Loan and in consideration therefor, as follows:
1. The Bridge Loan made by you will be evidenced by promissory notes of
the Company, dated the date hereof (the "Notes") payable to each
Lender, in the aggregate principal amount of $1,000,000 bearing
interest at 10% per annum, with principal and interest due and payable
in full on the earlier of (a) July 1, 1998 or (b) the date which is
three (3) business days following the receipt by the Company and/or its
subsidiaries of financing aggregating at least $5,000,000 (the
"Maturity Date").
2. The Bridge Loan will be disbursed in immediately available funds by
wire transfer to the following account:
Chase Manhattan Bank
00 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Routing # 021 000 021
For account of Picknet, Inc.
Account # 6002 004726
3. In consideration for the loan, the Company shall issue to the Bridge
Lenders an aggregate of warrants to purchase 1,000,000 shares of the
Company's common stock at a price of $0.35 per share for a period
terminating three years from the date hereof. The Company agrees to
provide piggyback registration rights for the shares underlying the
warrants and the warrants shall contain reasonable and standard
cashless exercise provisions.
4. In the event that the Company has not paid to the Bridge Lender all
principal and interest due and owing on or prior to the Maturity Date,
the Borrower shall be in default of the Note and:
a) The interest on all principal and accrued interest shall become
18%.
b) The Borrower shall, at its option, have the right to convert the
Note (principal and accrued interest) into common stock of the
Borrower at a price which is equal to the sum of (a) $0.25 per
share and (b) 50% of the closing bid price for the Borrower's
common stock for that day immediately prior to the Lender's
notice of conversion. Such conversion option shall commence upon
the Borrower's default under the Note. This conversion option,
and any other rights of the Lender upon default, do not limit or
compromise the Bridge Lender's other remedies, including those
set forth in the other provisions of this Agreement, the Note or
the law.
(i) If following a default and the vesting of the Lender
conversion option, the Borrower makes payment in full
on its financial obligations under the Note, the
Lender may, within 30 days following receipt of such
payment, return all such funds to the Borrower and
exercise the conversion rights which accrued to the
Note upon such default.
(ii) The conversion of the Note shall be deemed to have
been made immediately prior to the close of business
on the date (each an "Exercise Date") of the
surrender to the Company for exercise of the Note.
Such conversion, evidenced in writing, shall be
executed by the Bridge Lender or his attorney duly
authorized in writing and shall be delivered to the
Company at its corporate offices located at Wayne
Interchange Plaza XX, 000 Xxxxx 00 Xxxx, Xxxxx Xxxxx,
Xxxxx, X.X. 07470 (the "Corporate Office"), or at any
such other office or agency as the Company may
designate.
(iii) The person entitled to receive the number of shares
deliverable on conversion shall be treated for all
purposes as the holder of such shares as of the close
of business on the Exercise Date. The Company shall
not be obliged to issue any fractional share interest
in shares issuable or deliverable on such conversion
and such fractional shares shall be of no value
whatsoever.
(iv) Within ten days after the conversion date, the
Company, at its own expense, shall cause to be issued
and delivered to the person or persons entitled to
receive the same, a certificate or certificates in
the name requested by the Bridge Lender for the
number of shares deliverable on such conversion. No
adjustment shall be made in respect of cash dividends
on shares delivered on such conversion. All shares of
Common Stock delivered upon such conversion shall be
validly issued, fully paid and non-assessable, and
shall be free of all taxes, liens and charges with
respect to the issuance thereof.
(v) The Borrower agrees to provide piggyback registration
rights for the shares received upon conversion.
(vi) The Borrower shall, at all times, reserve for
issuance and/or delivery upon conversion of the Notes
such number of shares of its Common Stock as shall
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be required for issuance and delivery upon conversion
of the Notes (inclusive of accrued interest).
5. The Lenders shall have no obligation to make the Bridge Loan unless and
until the following conditions precedent have been satisfied in the
sole judgment of the Lenders:
a) The Notes and the Warrants shall have been executed and
delivered and all other legal matters related to the Bridge
Loan have been satisfied;
b) All legal matters relating to the Bridge Loan shall be
reasonably satisfactory to counsel to the Lenders.
6. The Company represents to the Lenders that this letter agreement (the
"Agreement"), the Notes and Warrant Certificates have been duly
executed by it, have been duly authorized by all necessary corporate
action on the part of the Company, constitute the valid and legally
binding obligation of the Company, enforceable in accordance with their
terms except as such enforceability may be limited by laws of
bankruptcy, fraudulent conveyance, creditors rights or principles of
equity, and are not inconsistent with the term of the Company's
certificate of incorporation or by-laws, and that the execution,
delivery and performance of the Agreement, the Notes and the Warrants
do not and will not breach or result in a default under any agreement
to which the Company is a party.
7. Representations and Warranties of the Lender. Each Lender represents
and warrants to the Company as follows:
a) The Lender has received, read and understands the materials
provided by the Company. Further, the Lender has had such
opportunity to ask questions of and to receive answers from
the Company, or an agent of the Company, concerning the terms
and conditions of the investment and the business and affairs
of the Company, and to verify such information as the Lender
considers necessary or advisable in order to form a decision
concerning an investment in the Company.
b) The Note being issued to such Lender is being acquired for
investment for the Lenders own account and not with the view
to, or for resale in connection with, any distribution or
public offering hereof. The Lender understands that none of
the securities of the Company have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws by reason of contemplated issuance
in transaction exempt from the registration requirements of
the Securities Act and applicable state securities laws and
that the reliance of the Company and others upon these
exemptions is predicated in part upon this representation by
the Lender. The Lender further understands that the Note may
not be transferred or resold without registration under the
Securities Act and any applicable state securities laws, or an
exemption from the requirements of the Securities Act and
applicable state securities laws.
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c) The Lender's principal residence is located in the State of New
York.
d) The Lender is able to bear the loss of the entire investment of
the Note without any material adverse effect on the Lender's
financial position or prospects, and the Lender has such
knowledge and experience of financial and business matters to be
capable of evaluating the merits and risks of the investment to
be made pursuant to this Agreement.
e) This Agreement has been duly authorized by all necessary action
on the part of the Lender, has been duly executed and delivered
by the Lender and is a valid and binding agreement of the Lender.
This Agreement shall be governed by and construed in accordance with the law of
the State of New York, may not be amended, modified or waived except in writing,
signed by both parties hereto, shall be binding upon the Company and inure to
the benefit of the Lenders and its respective successors, assigns, heirs and
legal representatives.
Very truly yours,
PICK Communications, Corp
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
Vice President and Chief Financial Officer
Agreed and Accepted:
XXXXXXX EQUITIES
BY: /s/ XXXXXXX EQUITIES
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