1
EXHIBIT 10.03
AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment") is made and
entered into as of the 30th day of January, 2001, by and among HIGH SPEED NET
SOLUTIONS, INC., a Florida corporation ("HSNS"), SUMMUS, LTD., a Delaware
corporation ("Summus"), and XXXXX XXXXXXX, a shareholder of Summus ("Jawerth").
WITNESSETH:
WHEREAS, the parties entered into an Asset Purchase Agreement dated as
of October 30, 2000 ("Agreement"), pursuant to which HSNS would acquire all of
the assets of Summus;
WHEREAS, some of the conditions to closing set forth in the Agreement
have not been satisfied;
WHEREAS, with certain modifications to the transaction contemplated by
the Agreement, as set forth herein, the parties still desire to combine the
businesses of Summus and HSNS by having HSNS acquire all of the assets of Summus
on the terms and conditions set forth in the Agreement, as modified and
amendment by this Amendment.
NOW, THEREFORE, for and in consideration of the premises, and the
mutual covenant and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. AMENDMENTS TO AGREEMENT. The following Paragraphs or
provisions of the Agreement are hereby modified or amended as indicated:
1.1: Delete "but excluding the Excluded Assets described
below".
1.1(M): Delete "("Common Stock")".
2
2.1: Is revised to read as follows:
PURCHASE PRICE. In consideration of the sale,
assignment, transfer and conveyance of the Acquired Assets,
and in reliance upon the covenants, representations and
warranties made herein by Summus and the Stockholders, HSNS
shall:
(A) Issue and deliver a total of 20,012,552
shares of Common Stock and 4,000 shares of Convertible
Preferred Stock, plus adjustment for options exercised prior
to Closing at the conversion ratio set forth in PARAGRAPH 4.8,
to Summus pursuant to PARAGRAPH 3.2 below;
(B) Issue and deliver 2,000 shares of
Convertible Preferred Stock to the Escrow Agent (as defined in
the Escrow Agreement referred to below) to be held and
distributed by the Escrow Agent pursuant to the terms of this
Agreement and the Escrow Agreement attached to this Agreement
as EXHIBIT D to be executed and delivered by the parties
pursuant to PARAGRAPH 3.2 below as security for obligations of
Summus and the Stockholders under this Agreement (the "ESCROW
AGREEMENT").
(I) The shares of Convertible Preferred
Stock issued pursuant to this Clause 2.1(b) (the "ESCROWED
SHARES") shall be issued in the name of the Escrow Agent, as
escrow agent under the Escrow Agreement. The Escrowed Shares
shall be held for twelve (12) months from the Closing Date.
(II) The parties hereby appoint BB&T,
effective as of the Closing Date, to serve as the Escrow Agent
for purposes of administering the escrow arrangements
contemplated by the Escrow Agreement (such representative, or
any successor representative appointed under the Escrow
Agreement, the "ESCROW AGENT").
2
3
(C) Issue and deliver warrants to purchase a
total of 500 shares of the Convertible Preferred Stock,
exercisable on an "as converted" basis at the closing market
price on the Closing Date (the "WARRANT EXERCISE PRICE") for a
period of five (5) years from the date of this Agreement (the
"WARRANT EXERCISE PERIOD") (the "WARRANTS"). (It is
anticipated that Summus' plan of liquidation will provide for
distribution of the Warrants on a pro-rata basis to Summus
shareholders other than HSNS and Xxxxx Xxxxxxx and HSNS and
Xxxxx Xxxxxxx waive their rights to participate in
distribution of the Warrants).
(D) Assume the Assumed Liabilities as defined in
PARAGRAPH 2.2 below.
The shares of Common Stock and Convertible Preferred Stock
referred to in the foregoing clauses (a) and (b) are
collectively referred to as the "STOCK PURCHASE PRICE," and
together with the items referred to in the foregoing clauses
(c) and (d), the "PURCHASE PRICE."
3.2(A): Insert ", Convertible Preferred Stock" after "Common
Stock".
3.2(A)(VI)(A): Insert "and Convertible Preferred Stock" after
"Common Stock".
3.2(A)(VI)(B): Substitute "Convertible Preferred Stock for "Common
Stock".
3.2(A)(VII): Substitute "Convertible Preferred Stock" for "Common
Stock".
3.2(A)(XII): ARTICLES OF AMENDMENT. Certified Articles of
Amendment authorizing 6,500 shares of Convertible
Preferred Stock.
3
4
3.2(B)(I): Delete "; and (iv) that the shares representing the
Stock Purchase Price have been acquired for
investment and not with a view to resale, except as
provided in Paragraphs 9.12 and 9.13 below".
4.5(A): Substitute "Purchase Price" for "Common Stock".
4.8: Substitute "21.9733" for "18.5629".
4.10: Is revised to read as follows:
BOARD OF DIRECTORS AND SENIOR MANAGEMENT.
(A) Prior to the Closing, HSNS and Summus agree
that each party shall maintain its own Board of Directors
having a majority of members who are not "INSIDERS." Until the
Closing, a Special Committee of the Summus Board of Directors
will set guidelines for Summus' expenditures and must approve
any proposed deviation from these guidelines before any such
expenditure are made. Immediately following the Closing, the
size of the HSNS Board shall be increased to ten, with eight
directors initially - four from HSNS (Xxxxxx Xxxx, Xxxxxxx
Xxxxxxx, Xxxxxxxx Xxxxxxxx, and Xxxxxx Xxx), and four from
Summus (Xxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx, and
Xxxxx Xxxxxxxx. The four board members from HSNS will search
for and select an additional director; when that selection has
occurred, the selected director and Xxxxx Xxxx will be elected
by the Board as the ninth and tenth board members. Until those
final board members are elected, Xxxxx Xxxx will be entitled
to attend and speak at board meetings as an observer.
4
5
Effective at Closing, Xxxxxx Xxxxxxx will serve as Chairman of
the Board and Xxxx Xxxxxxx as Vice-Chairman. Upon hiring a new
CEO, Xxxxx Xxxxxxx shall become Chairman of the Board, unless
he declines. All directors must stand for re-election after
one year at the annual shareholder meeting as per HSNS'
by-laws.
(B) Effective at Closing, the senior management
team will consist of: Xxxxx Xxxxxxx, co-Chief Executive
Officer and Chief Scientist; Xxxx Xxxxxxx, co-Chief Executive
Officer; Xxxx Ban, Chief Operating Officer; Xxx Xxxxxx, Chief
Financial Officer; Xxxx Xxx, President. A search for a new CEO
will begin immediately, conducted by a special committee
consisting of outside directors. The decision to hire a new
CEO shall require the affirmative vote of 2/3 of the
directors. Personnel reduction will be determined by the
senior management team, except the Board shall make such
determination if the senior management team is deadlocked.
(C) Approval of any merger or acquisition of or
by HSNS shall require the affirmative vote of 2/3 of the
directors and, if necessary, the directors shall amend the
by-laws, or propose a by-law amendment for shareholder
approval, to so provide.
4.11(B): Insert before the period at the end of the Section,
", in which case, holders of shares issued as Stock
Purchase Price, and their successors and assigns,
shall have resale registration rights as provided in
Paragraph 4.15(a)".
5
6
4.12: Insert before the period at the end of the Section,
"or pursuant to the provisions of Paragraph 4.16".
4.14(B): In the first sentence, substitute "until the earlier
of (i) the Closing Date or (ii) March 31, 2001" for
"until the earlier of (i) the Closing Date or (ii)
three months after the date of this Agreement."
4.14(F): Change "within sixty (60) days of the date of this
Agreement," to "by March 31, 2001,".
4.15: Change caption to "Registration Rights"
Redesignate subsections (a), (b) and (c) as (b), (c)
and (d) and add subsection (a) as follows:
"(A) DEMAND REGISTRATION. If a North
Carolina Permit is not obtained as described above,
and the Stock Purchase Price is provided by private
placement of Common Stock and/or Convertible
Preferred Stock, then, at any time prior to the
effectiveness of HSNS' Form S-1 Registration
Statement (SEC File No. 333-41730) (the "S-1
Registration Statement") upon written notice to HSNS
from the holders of at least 50% of the shares issued
as Stock Purchase Price, on an as-converted basis,
HSNS shall (1) give prompt written notice to all
other holders of shares issued as Stock Purchase
Price, (2) amend the S-1 Registration Statement to
include for resale any such shares of Common Stock as
may be requested by the holders of such shares in
writing within 10 business days after receipt of such
6
7
notice from HSNS (the "Demand Shares") and (3) use
its best efforts to have the S-1 Registration
Statement declared effective by the SEC as promptly
as practicable after the filing of such amendment;
provided, however, that HSNS shall not be required to
attempt to register shares of Common Stock that
cannot be issued under the charter documents of HSNS.
To the extent that any Demand Shares are included
therein, until all of such Demand Shares have been
distributed, HSNS shall keep the S-1 Registration
Statement effective or, in the alternative, can
terminate the S-1 provided such Demand Shares are
covered by an S-3 registration or other form of
registration. In addition, for as long as the S-1
Registration Statement remains effective, HSNS shall
file such prospectus supplements as necessary to
permit public sales of Demand Shares by transferees
of the holders of Demand Shares listed in the S-1
Registration Statement, to the extent that such
transferees received such shares in a private
transaction. HSNS shall pay all expenses relating to
the registration under this subsection other than
underwriting discounts, selling commissions, fees and
expenses of counsel." In new subsection (B) (COMPANY
REGISTRATION), add the following after the last
sentence of that subsection: "The rights in this
subsection 4.15(b) are in addition to the rights
granted above in subsection 4.15(a) and in no way
limit Summus' or Summus shareholders' ability to
include shares in the S-1 Registration Statement."
7
8
In new subsection (C) (UNDERWRITING), substitute for
"part (a)(i) above" in the third line, "part (b)(i)
above", and substitute for "Section 2.3(b)" in the
last sentence of the second paragraph "subsection
4.15(c)".
Insert after "Common Stock", wherever it appears,
"including common stock issued upon conversion of
Convertible Preferred Stock";
Substitute for "Stockholder" and "Stockholders",
"Summus shareholder" and "Summus shareholders",
respectively.
4.16: The first sentence is revised to read: "Summus and
each Stockholder agree that, except for those shares
referred to in Paragraphs 9.12 and 9.13, none of the
shares of Common Stock or Convertible Preferred Stock
included in the Share Purchase Price may be sold in
public market transactions during the twelve (12)
months following the Closing, provided that one and
one-half percent (1.5%) of the shares held by Summus
and each Summus shareholder and included in the Stock
Purchase Price (including shares of Common Stock
issued upon conversion of shares of Convertible
Preferred Stock) may be sold or otherwise disposed of
in each of the third through twelfth months following
Closing. Summus agrees that it shall require a
similar agreement from any Summus stockholder who
receives a distribution of shares of Common Stock or
Convertible Preferred Stock included in the Share
Purchase Price, prior to receiving such
distribution."
8
9
4.17: DELETED
4.19: Substitute "3,669,539" for "3,111,293".
6.4: Is revised to read as follows:
6.4 AUTHORIZATION OF COMMON STOCK AND
CONVERTIBLE PREFERRED STOCK. The shares of Common
Stock and Convertible Preferred Stock to be issued at
Closing pursuant to this Agreement will be duly
authorized and reserved for issuance at or before the
Closing and upon issuance pursuant to the terms of
this Agreement will be (a) validly issued, fully paid
and nonassessable; (b) free of any preemptive rights
or rights of first refusal, with the exception of
encumbrances contemplated by the Escrow Agreement and
the Voting Trust Agreement, the form of which are
attached hereto, and securities law restrictions,
free of any Liens or encumbrances. Summus and each
Stockholder acknowledge that the charter documents of
HSNS do not authorize a sufficient number of shares
of Common Stock to allow the conversion of shares of
Convertible Preferred Stock, the exercise of the
Warrants, and the exercise of all outstanding options
and all options to be granted as reflected in this
Agreement, as amended. Promptly after the later of
(i) Closing, or (ii) HSNS shares becoming quoted and
trading on the OTC Bulletin Board following
effectiveness of the HSNS S-1 Registration Statement,
but in any event, HSNS shall file proxy materials
with the SEC not later than July 31, 2001, HSNS shall
9
10
use its best efforts to cause its charter documents
to be amended to increase the number of authorized
shares of its common stock to an amount sufficient
for the transactions contemplated by this Agreement,
as amended, including the conversion of shares of
Convertible Preferred Stock, the exercise of the
Warrants, and the exercise of all outstanding options
and all options to be granted as reflected in this
Agreement, as amended, and at the effective time of
such amendment, HSNS shall reserve the requisite
number of shares of common stock for issuance.
6.7: Insert in the second line after "per share",
"("Common Stock")". In the second sentence,
substitute "and 2,000 shares of HSNS preferred stock
were outstanding." for "and no shares of HSNS
preferred stock were outstanding."
7.1(B): Insert after "Escrowed Shares" in the 13th line and
the 18th line, "(on an "as converted" basis)".
8.11: Insert in the second line after "Agreement," "as
modified and amended by the Amendment,".
8.12: Is revised to read as follows:
"The charter documents of HSNS have been amended, if
necessary, to designate a class (and sufficient
number of authorized shares) of convertible preferred
stock which will have equivalent rights as Common
Stock with regard to voting,
10
11
dividends and liquidation (on an "as converted"
basis) and shall be convertible into 1,000 shares of
Common Stock for each share of convertible preferred
stock ("Convertible Preferred Stock"). The
preferences, limitations, and relative rights of the
Convertible Preferred Stock are attached as Exhibit
L."
8.13: 2000 PERFORMANCE BONUS. HSNS shall reserve 1,700,000
shares of Common Stock for calendar year 2000
performance bonuses for HSNS and Summus employees and
shall grant options to employees entitled to such
performance bonuses.
9.10: Insert after "Agreement," in the second line "as
modified and amended by the Amendment".
9.12: Is revised to read as follows:
SALE OF XXXXX XXXXXXX'X HSNS COMMON STOCK.
HSNS shall use reasonable commercial efforts to
assist Xxxxx Xxxxxxx in the private sale of up to
$2,500,000 worth of his shares of Common Stock at a
per share price not less than $1.50.
9:13: Is revised to read as follows:
SALE OF XXXXXXX XXXXXXX'X HSNS COMMON STOCK.
HSNS shall use reasonable commercial efforts to
assist Xxxxxxx Xxxxxxx in the private sale of up to
$1,000,000 worth of her shares of Common Stock at a
per share price not less than $1.50.
11
12
9.14: DELETED
9.15: Is revised to read as follows:
"The charter documents of HSNS have been amended, if
necessary, to designate a class (and sufficient
number of authorized shares) of convertible preferred
stock which will have equivalent rights as Common
Stock with regard to voting, dividends and
liquidation (on an "as converted" basis) and shall be
convertible into 1,000 shares of Common Stock for
each share of convertible preferred stock
("Convertible Preferred Stock"). The preferences,
limitations, and relative rights of the Convertible
Preferred Stock are attached as Exhibit L."
9.16 2000 PERFORMANCE BONUS. HSNS shall reserve 1,700,000
shares of Common Stock for calendar year 2000
performance bonuses for HSNS employees, including
those acquired from Summus as well as existing HSNS
employees and other new employees, and shall grant
options to employees entitled to such performance
bonuses.
10.11(B): Is revised to read as follows:
"either party may terminate the Agreement, as
amended, if the Closing does not occur within sixty
(60) days of the date of the Amendment."
12
13
11.1: Is amended by modifying or adding the following
definitions:
"COMMON STOCK" shall have the meaning set forth in
Paragraph 6.7.
"CONVERTIBLE PREFERRED STOCK" shall have the meaning
set forth in Paragraph 8.12.
"SUMMUS SHAREHOLDER" and "SUMMUS SHAREHOLDERS" shall
mean any one or more (including all) shareholders of
Summus as of the Closing Date.
2. FAIRNESS HEARING. It having been determined that a new
fairness hearing is required, the parties shall again comply with the provision
of Paragraphs 4.11, 5.28 and 6.10 of the Agreement with regard thereto.
3. REVISED EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referenced below, copies of which are attached, are hereby substituted for, and
replace, the corresponding Exhibit or Schedule attached to the Agreement:
Exhibit B-1: Executive Employment Agreement
(Xxxxx Xxxxxxx)
Schedule 2.2(a): Specified Assumed Liabilities
Schedule 4.7 List of Current Summus Employees
[LIST OTHERS]
4. NO OTHER MODIFICATIONS. Except as expressly set forth herein,
there are no other modifications or amendments to the Agreement, which remains
in full force and effect, as modified and amended by this Amendment.
13
14
5. GOVERNING LAW. The validity and effect of this Amendment shall
be governed by and construed and enforced in accordance with the Laws of the
State of North Carolina, without regard to its conflict of laws rules.
IN WITNESS WHEREOF, the parties have executed or caused this Amendment
to be executed by their duly authorized agents as of the day and year first
above written.
HIGH SPEED NET SOLUTIONS, INC. SUMMUS, LTD.
By: /s/ Xxxxxx Xxx By: /s/ Xxxxx Xxxxxxx
------------------------------ --------------------------------
Xxxxxx Xxx, President Xxxxx Xxxxxxx, President
STOCKHOLDER
/s/ Xxxxx Xxxxxxx
---------------------------------
Xxxxx Xxxxxxx
14
