1
INFINITY INVESTORS LIMITED
XXXXXXX WATERFONT PLAZA
P.O. BOX 556-MAIN STREET
CHARLESTOWN, NEVIS, WEST INDIES
April 15, 1999
Orix Global Communications, Inc.
0000 Xxxx Xxxxxxxx Xxxx
Xxxx. X, Xxxxx 000
Xxx Xxxxx, XX 00000
Re: ORIX GLOBAL COMMUNICATIONS, INC.
Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Purchase Agreement") by and between Orix Global Communications, Inc., a Nevada
corporation (the "Company"), the Founders (as defined therein) and Infinity
Investors Limited, a Nevis West Indies corporation (the "Lender"), dated as of
June 11, 1998, pursuant to which the Company issued a $6 million Debenture to
the Lender (the "June Debenture").
Pursuant to the terms of a letter agreement dated August 19, 1998, the
Company issued an additional Debenture of $850,000 to the Lender (the "August
Debenture"). Pursuant to the terms of a letter agreement dated April 15, 1999,
the Company issued an additional Debenture of $200,000 to the Lender (the "April
Debenture"). The August Debenture, April Debenture and the June Debenture are
herein collectively referred to as the "Original Debentures." Pursuant to the
terms of a letter agreement dated February 9, 1999, the Company issued an
additional Debenture of $390,000 to the Lender (the "February Debenture"). As of
the date hereof, no principal payments have been made by the Company on the
Original Debentures or the February Debenture.
Pursuant to the terms of this letter agreement (the "Letter
Agreement"), the Company, the Founders and the Lender now desire to (i) provide
for an extension of the maturity date of the February Debenture from February
17, 1999 to June 30, 1999, on which date the entire unpaid principal balance
thereof and all accrued and unpaid interest thereon shall be due and payable in
full, (ii) amend and restate the Original Debentures to change the repayment
terms thereof as set forth in the Amended and Restated Debenture attached hereto
as Exhibit A (the "Amended Debenture") and (iii) enter into the additional
agreements set forth herein. Capitalized terms used herein and otherwise defined
shall have the meanings described thereto in the Purchase Agreement.
Therefore, the Company, the Founders, the Lender and the other
signatories hereto (collectively, the "Parties") agree as follows:
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Orix Global Communications, Inc.
April 15, 1999
Page 2
1. ISSUANCE OF DEBENTURE. On the date hereof, the Company shall issue
to the Lender the Amended Debenture in the form of Exhibit A attached hereto.
The Amended Debenture shall amend, restate and replace in their entirety the
Original Debentures. The Parties hereby acknowledge and agree that the Amended
Debenture and February Debenture shall each be treated as issued pursuant to the
terms of the Purchase Agreement and each Related Agreement, including, without
limitation, the Security Agreement. It is expressly agreed by the Company that
the Lender shall be provided the same rights, preferences, privileges, causes of
action, security, demands and other benefits under the Purchase Agreement and
each Related Agreement with respect to the Amended Debenture and February
Debenture as existed with respect to the Original Debentures.
2. REPAYMENT OF FEBRUARY DEBENTURE. The Lender hereby agrees that the
maturity date of the February Debenture shall be extended until the earlier to
occur of (i) the occurrence of an Event of Default (as defined therein) or (ii)
June 30, 1999 (the earlier to occur of such dates being referred to as the
"February Debenture Maturity Date"), on which date the entire principal balance
thereof shall be due and payable in full. The Company shall be required to pay
accrued and unpaid interest on the February Debenture monthly at the same time
as accrued and unpaid interest is due and payable on the Amended Debenture. In
the event the February Debenture is not repaid in full on or before the February
Debenture Maturity Date, then the principal balance of the February Debenture
shall be convertible, in whole or in part, at any time and from time to time, at
the sole and exclusive option of the Lender, at a conversion price equal to
$2,778 per share of Common Stock (such that the entire $390,000 principal
balance is convertible into 140 shares of Common Stock). All accrued and unpaid
interest shall be paid in cash by the Company upon any such conversion. The
conversion formula set forth herein shall be subject to adjustment on a
customary basis for stock splits, stock dividends, reorganizations and similar
events, and in the same manner as set forth in the Lender Warrants (as hereafter
defined). From and after the February Debenture Maturity Date, the Company shall
not be authorized to prepay any portion of the principal balance thereof without
providing twenty (20) days prior written notice to the Lender, during which
period Lender shall be afforded the conversion rights specified herein.
3. PARTICIPATION RIGHT; STOCK OWNERSHIP. Consistent with the terms of
the Purchase Agreement and the Related Agreements, the Parties acknowledge that
the Lender may from time to time participate or assign all or a portion of the
Amended Debenture to one or more Persons, each of which shall take the assigned
or participated interest with the same rights, preferences, privileges, causes
of action, security, demands and other benefits as exist with respect to the
Lender. Consistent with this right, the Lender previously entered into a
Participation Agreement with Infinity Emerging Opportunities Limited, which
thereafter assigned its rights thereunder to its wholly-owned subsidiary IEO
Holdings Limited ("IEO Holdings"), pursuant to which the Lender participated an
interest in a portion of the Original Debentures and February Debenture (the
"Participation Agreement"). The Parties hereby acknowledge that the Lender
intends to participate an aggregate 50% interest in the Amended Debenture and
February Debenture to IEO Holdings, and hereby consent to such participation.
Further, the Parties hereby acknowledge that pursuant to such rights, the Lender
previously assigned 1,200 shares of Common Stock issued to the Lender in
connection with the Purchase Agreement to IEO
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Orix Global Communications, Inc.
April 15, 1999
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Holdings. The Lender and IEO Holdings shall, among themselves, determine the
funding of the Additional Advance, and thereafter shall, among themselves,
provide for a transfer of funds from IEO Holdings to the Lender as necessary,
such that following such transfer each of IEO Holdings and the Lender shall own
a 50% interest in the Amended Debenture and February Debenture. The Parties
hereby acknowledge and agree that as of the date hereof, (i) 3,600 shares of
Common Stock are issued and outstanding, (ii) 1,200 shares of Common Stock are
owned by the Lender, (iii) 1,200 shares of Common Stock are owned by IEO
Holdings, (iv) the remaining 1,200 shares of Common Stock are owned by the
Founders and their Permitted Assignees as set forth on Exhibit B hereto
(collectively, the "Company Ownership Percentages") and (v) except for the
Option Grants (as hereinafter defined), the shares of Common Stock issuable upon
conversion of the February Debenture (as hereafter described) and the Lender
Warrants, no other securities convertible, exercisable or exchangeable for
shares of Common Stock exist. The Company and each Founder hereby covenant and
agree to forbear from ever challenging the Company Ownership Percentages.
4. AGREEMENT WITH AXIS. The Company is currently negotiating a
potential agreement with DeSarrollo Axis ("Axis") pursuant to which Axis will
provide certain marketing services to the Company in exchange for a payment by
the Company to Axis of a certain portion of the operating profits of the Company
(the "Axis Agreement"). The Parties hereby (i) acknowledge the Company's
intention to enter into the Axis Agreement in a form acceptable to the Company,
and (ii) agree that execution of the Axis Agreement shall not change the Company
Ownership Percentages.
5. FUTURE TRANSACTIONS. The Parties hereby further acknowledge that in
the event the Company determines to conduct business in any area of the world
through additional subsidiaries, affiliates or related entities in the future,
each such subsidiary, affiliate or related entity shall be, directly or
indirectly, owned by the existing stockholders of the Common Stock in the same
Company Ownership Percentages as specified herein (as such percentages may be
prorata reduced after the date thereof through the issuance of any additional
shares of Common Stock, or securities convertible, exchangeable or exercisable
for shares of Common Stock including, without limitation, issuances to local
partners or participants in each applicable market); provided, however, nothing
contained herein shall impose on the Lender or any of its affiliates,
subsidiaries, managers, advisors, agents or representatives (the "Lender Group")
any obligation to offer to the Company or any Founder any opportunities in the
telecommunications industry which the Lender Group may from time to time acquire
or review.
6. MANAGEMENT OPTION PLAN. Consistent with Section 9(i) of the Purchase
Agreement, the Founders, the Lender and the Company had anticipated the
establishment of a Management Option Plan for shares of Common Stock on a Fully
Diluted Basis (the "Approved Plan"). The Approved Plan was to be used, in the
discretion of the Board of Directors of the Company (by majority vote), for
issuance of stock grants to management personnel (whether employees,
consultants, management companies or otherwise) as an incentive to such
individuals to perform services on behalf of the Company and its subsidiaries
and affiliates. The Parties hereby acknowledge that in August, 1998, the Board
of Directors of the Company authorized and
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Orix Global Communications, Inc.
April 15, 1999
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approved a grant of stock options as to 90 shares of Common Stock of the Company
to Xxxxx Xxxxxxxx, President of the Company, on the terms set forth on Exhibit
C-1 hereto (the "Xxxxxxxx Option Grant"). The Parties hereby ratify and approve
the Xxxxxxxx Option Grant. In addition, the Board of Directors of the Company
hereby authorizes and approves grants of stock options for an aggregate of 600
additional shares of Common Stock of the Company (the "Additional Option Grant")
to Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxx and Xxxxxx Xxxxxxxx on the terms set
forth on Exhibits C-2, C-3, C-4 and C-5 hereto, as applicable, on the basis of a
Company valuation of $10,000,000 as more fully described on such Exhibits (the
Additional Option Grant, together with the Xxxxxxxx Option Grant, are
hereinafter referred to as the "Option Grants"). Further, the Company hereby
covenants and agrees to promptly present to the Board of Directors of the
Company, for review and approval (by a majority vote), a standard stock option
plan which would encompass the Stock Grants and potential future stock grants
thereunder.
7. LENDERS' RIGHT TO APPOINT DIRECTORS; CHANGES IN OFFICERS AND
DIRECTORS, ETC. The Parties hereby acknowledge and agree that (i) the
Stockholders Agreement authorizes the Lender and IEO Holdings to appoint three
(3) of the total of five (5) Directors of the Company, (ii) the Lender and IEO
Holdings are authorized, without the prior approval or consent of the Founders
or the Company, to replace, remove (with or without cause), fill vacancies and
appoint any Persons to serve as their three (3) appointees to the Board of
Directors of the Company, (iii) all actions by the Board of Directors of the
Company shall be taken by an affirmative vote of a majority of the Directors,
(iv) the Board of Directors of the Company shall adopt amended and restated
bylaws of the Company consistent with the provisions of the Stockholders
Agreement and this paragraph 7 in form acceptable to a majority of the Board of
Directors of the Company, and (v) as of the date of this Letter Agreement the
Board of Directors of the Company is comprised of Xxxxx Xxxx, Xxxxxxx Xxxxxxx,
Xxxxx Xxxxxxxx, Xxxxx Xxxxxx and Xxxxx Xxxx. Further, the President is hereby
authorized and directed to pay all amounts due and owing on the February
Debenture and Amended Debenture as and when the same are due pursuant to the
terms thereof without the further consent or approval of any other party.
8. RATIFICATIONS; PAYMENT OF INTEREST AS OF APRIL 30, 1999. The terms
and provisions of the Purchase Agreement, as modified by this Letter Agreement,
are ratified and confirmed and shall continue in full force and effect. By
executing this Letter Agreement, the Company and each other party hereto
acknowledges and agrees that (a) the term "Secured Obligations" as defined in
the Security Agreement dated June 11, 1998 includes without limitation all
obligations, liabilities and indebtedness of the Company under the Amended
Debenture, the February Debenture and under the Purchase Agreement, as amended
hereby, and (b) the term "Indebtedness" as defined in the Pledge Agreement dated
June 11, 1998 includes without limitation all obligations, liabilities and
indebtedness of the Company under the Amended Debenture, the February Debenture
and under the Purchase Agreement as amended hereby, and (c) each of the security
and pledge agreements included in the Related Agreements secures, among other
indebtedness, the payment and performance of all indebtedness, liabilities and
obligations of the Company under the Amended Debenture, the February Debenture
and under the Purchase Agreement as amended by this Letter Agreement. The
Founders and the Company acknowledge and agree that the Purchase Agreement, each
of the Related Agreements, as
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Orix Global Communications, Inc.
April 15, 1999
Page 5
amended hereby, and the February Debenture are and shall remain in full force
and effect and are and shall continue to be the legal, valid and binding
obligation of the Company and the Founders (where applicable), enforceable
against them in accordance with their respective terms. No dispute, right of
setoff, counterclaim or defense exists with respect to the payment by the
Company of any amounts due under the Original Debentures or the February
Debenture. On April 30, 1999, the Company shall pay to the Lender all accrued
and unpaid interest owing as of April 30, 1999 on both the Amended Debenture and
February Debenture.
9. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Lender and IEO Holdings that (a) the Company does not own any
equity interest in any Person and does not have any Subsidiaries (except for the
Company's ownership of 100% of the outstanding stock of UCI Teleport, Inc. and
Latin Gate); (b) the execution, delivery and performance of each of this Letter
Agreement and the Amended Debenture and all other documents executed and/or
delivered in connection herewith (the "Amendment Agreements") and all
transactions and documents contemplated hereby and thereby have been authorized
by all requisite corporate action on the part of the Company; (c) each of the
Amendment Agreements, all other documents executed and/or delivered in
connection herewith and the February Debenture constitute legal, valid and
binding obligations of the Company, enforceable against the Company, in
accordance with its terms, subject to or limited by applicable liquidation,
bankruptcy, conservatorship, insolvency, reorganization, rearrangement,
moratorium, or other similar laws relating to or affecting the rights of
creditors generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (d) there is
no provision of law, in the charter or bylaws of the Company, and no provision
of any existing mortgage, contract, lease, indenture or agreement binding on any
of them, which would be contravened by the making or delivery of any of the
Amendment Agreements or any other document executed and/or delivered in
connection herewith, or by the performance or observance of any of the terms
hereof or thereof; (e) the execution, delivery and performance of the Amendment
Agreements and the transactions contemplated hereby and thereby do not require
any approval or consent of, or filing or registration with, any governmental or
any other agency or authority, of stockholders, or of any other party or, if
such approval or consent is required, the same has been obtained; (f) each of
the representations and warranties of the Company and the Founders, as
applicable, contained in the Purchase Agreement, as amended hereby, are true and
correct on and as of the date hereof as though made on such date except for
those limited by their terms to the date given or another specific date; and (g)
as of the date hereof, no Event of Default has occurred and is continuing.
10. GRANT OF WARRANTS. The Company hereby issues to the Lender and IEO
Holdings common stock purchase warrants in the form of Exhibit D hereto granting
each of the Lender and IEO Holdings the right to acquire 170 shares of Common
Stock of the Company (for an aggregate total of 340 shares of Common Stock) (the
"Lender Warrants"). The Lender Warrants shall be considered a Related Agreement.
Such Lender Warrants shall be issued based on a valuation of the Company of
$10,000,000 and shall be exercisable for five (5) years from the date of grant,
as more fully described therein.
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Orix Global Communications, Inc.
April 15, 1999
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11. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants made in the Purchase Agreement, any
Related Agreement and this Letter Agreement, or any other document furnished in
connection with this Letter Agreement, shall survive the execution and delivery
of this Letter Agreement, and no investigation by the Lender or any closing
shall affect the representations, warranties and covenants or the right of the
Lender to rely upon them.
12. REFERENCES TO AGREEMENTS. The Purchase Agreement, Amended Debenture
and Related Agreements and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Purchase Agreement, Amended Debenture and
Related Agreements, as amended hereby, are hereby amended so that any reference
therein to the Purchase Agreement, Amended Debenture and Related Agreements
shall mean a reference to such agreements as amended hereby.
13. FURTHER ASSURANCES. The Company agrees that at any time and from
time to time, upon the written request of the Lender, it will execute and
deliver such further documents and do such further acts and things as the Lender
may reasonably request in order to fully effect the purposes of this Letter
Agreement and to provide for the continued perfection and priority of the
security interests granted to the Lender.
14. SEVERABILITY. Any provision of this Letter Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Letter Agreement and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.
15. APPLICABLE LAW. This Letter Agreement and all other documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Nevada.
16. SUCCESSORS AND ASSIGNS. This Letter Agreement is binding upon and
shall inure to the benefit of the Lender, IEO Holdings, the Founders and the
Company, and their respective successors and assigns, except the Company may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Lender.
17. EFFECT OF WAIVER. No consent or waiver, express or implied, by the
Lender to or for any breach of or deviation from any covenant, condition or duty
by the Company shall be deemed a consent or waiver to or of any other breach of
the same or any other covenant, condition or duty.
18. ENTIRE AGREEMENT. THE PURCHASE AGREEMENT AS AMENDED HEREBY, THE
OTHER RELATED AGREEMENTS AND ALL AGREEMENTS EXECUTED IN CONNECTION WITH THIS
LETTER AGREEMENT (INCLUDING THE AMENDED DEBENTURE) REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER THEREOF AND MAY
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Orix Global Communications, Inc.
April 15, 1999
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NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
19. HEADINGS. The headings, captions, and arrangements used in this
Letter Agreement are for convenience only and shall not affect the
interpretation of this Letter Agreement. This Letter Agreement, the Amended
Debenture and all other documents and instruments executed and delivered in
connection herewith and therewith, may be executed by facsimile signature and in
one or more counterparts.
20. EXPENSE REIMBURSEMENT. The Company hereby agrees to promptly pay
all fees and costs of the Lender associated with the negotiation and preparation
of this Letter Agreement and the other documents attached hereto (including all
reasonable fees and costs of Xxxxx & Xxxxxx LLP).
21. COUNTERPARTS. This Letter Agreement may be executed by facsimile
signature and in one or more counterparts and it is not necessary that
signatures of all parties appear on the same counterpart, but such counterparts
together shall constitute but one and the same agreement.
[Signature pages follow]
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Orix Global Communications, Inc.
April 15, 1999
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To set forth your agreement with the foregoing, please countersign this
Letter Agreement in the space provided below.
Very truly yours,
INFINITY INVESTORS LIMITED
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED:
ORIX GLOBAL COMMUNICATIONS, INC.
By:
--------------------------------
Xxxxxx Xxxxxxxx, President
FOUNDERS:
-----------------------------------
Xxxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxx
IEO HOLDINGS LIMITED
(AS THE PARTICIPANT OF THE LENDER)
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
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Orix Global Communications, Inc.
April 15, 1999
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UNANIMOUS DIRECTOR WRITTEN ACKNOWLEDGMENT AND CONSENT:
-----------------------------------
Xxxxx Xxxx
-----------------------------------
Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxx
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EXHIBIT A
FORM OF AMENDED AND RESTATED DEBENTURE
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EXHIBIT B
CURRENT OWNERSHIP OF SHARES
OF COMMON STOCK
NAME NUMBER PERCENTAGE
---- ------ ----------
Infinity Investors Limited 1,200 1/3
IEO Holdings Limited 1,200 1/3
Founders and
Permitted Assignees,
as follows: 1,200 (in the aggregate) 1/3
Xxxxx Xxxxxx 594
Xxxx Xxxxxxx 281
Xxxxxx Xxxxxxxx 92
Xxxxx Xxxx 46
Xxxxxx X. Xxxxx 46
Xxxxxxx X. Xxxxx 27
Xxxx Xxxxxxxx 14
Xxxx Xxxxxx 25
Xxxxx Xxxxxxxx 5
Xxxxx Xxxxxxx 45
Xxxxxxxx Xxxxxxx 25
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EXHIBIT C-1
XXXXX XXXXXXXX STOCK GRANT
1. 90 shares of common stock, no par value, of the Company, as adjusted
for stock splits, recapitalizations and similar events affecting the common
stock.
2. Exercise price shall be based on a valuation of Company of
$10,000,000. Hence, the exercise price shall be $2,778 per share of common
stock.
3. 45 shares of common stock granted pursuant to the option shall be
vested as of the date of the employment agreement, and the additional 45 shares
shall vest upon the earlier to occur of (i) December 31, 1999, (ii) the death of
Employee or (iii) the consummation of a Material Transaction.
4. The option shall be exercisable at any time after the shares
applicable thereto have been vested; provided (x) the options must be exercised
on the earlier to occur of (i) December 31, 2003 or (ii) the consummation of a
Material Transaction and (y) the options shall be forfeited and terminate (if
not previously exercised) if Employee is terminated for Cause (as hereinafter
defined) or voluntarily resigns before 12/31/99 without the approval of a
majority of the Board.
(a) A Material Transaction shall mean the following:
(i) a Qualified Public Offering;
(ii) the merger or consolidation of the Company with
another entity in which the Company is not the surviving
entity (or survives only as a wholly owned subsidiary of
another entity) other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(iii) the sale of all or substantially all of the
assets of the Company; or
(iv) the dissolution and liquidation of the Company.
(b) A Qualified Public Offering shall mean any underwritten
offering by Company pursuant to an effective registration statement
under the Securities Act of 1933, then in effect, or any comparable
statement under any similar federal statute then in force.
(c) Cause shall mean:
(i) The willful and continued failure by
Employee to materially perform his duties after
demand for performance is delivered by the Company;
(ii) The engaging by Employee during the
term of employment
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in criminal conduct or conduct constituting moral
turpitude that is injurious to the Company,
monetarily or otherwise;
(iii) The embezzlement by Employee of any
funds of the Company; and/or
(iv) Acts of dishonesty or other acts
(including any breach of the terms, conditions or
covenants contained in his employment agreement) by
Employee that cause material adverse harm to the
Company (other than as a consequence of good faith
decisions made by Employee in the normal performance
of his duties).
5. The options granted herein shall be issued pursuant to a standard
option agreement approved by the Board of Directors of the Company.
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EXHIBIT C-2
XXXXX XXXXXX STOCK XXXXX
1. 212 shares of common stock, no par value, of the Company, as
adjusted for stock splits, recapitalizations and similar events affecting the
common stock.
2. Exercise price shall be based on a valuation of Company of
$10,000,000. Hence, the exercise price shall be $2,778 per share of common
stock.
3. 106 shares of common stock granted pursuant to the option shall vest
as of April 30, 1999, and the additional 106 shares shall vest as of April 1,
2000.
4. The option shall be exercisable at any time after the shares
applicable thereto have been vested; provided (x) the options must be exercised
on the earlier to occur of (i) December 31, 2003 or (ii) the consummation of a
Material Transaction and (y) the options shall be forfeited and terminate (if
not previously exercised) if Consultant is terminated for Cause (as hereinafter
defined) or voluntarily terminates his Consulting Agreement before 6/11/2000
without the approval of a majority of the Board.
(a) A Material Transaction shall mean the following:
(i) a Qualified Public Offering;
(ii) the merger or consolidation of the Company with
another entity in which the Company is not the surviving
entity (or survives only as a wholly owned subsidiary of
another entity) other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(iii) the sale of all or substantially all of the
assets of the Company; or
(iv) the dissolution and liquidation of the Company.
(b) A Qualified Public Offering shall mean any underwritten
offering by Company pursuant to an effective registration statement
under the Securities Act of 1933, then in effect, or any comparable
statement under any similar federal statute then in force.
(c) Cause shall mean:
(i) The willful and continued failure by
Consultant to materially perform his duties after
demand for performance is delivered by the Company;
(ii) The engaging by Consultant during the
term of the Consulting Agreement in criminal conduct
or conduct constituting moral
15
turpitude that is injurious to the Company,
monetarily or otherwise;
(iii) The embezzlement by Consultant of any
funds of the Company; and/or
(iv) Acts of dishonesty or other acts by
Consultant (including any breach of the terms,
conditions or covenants contained in his consulting
agreement) that cause material adverse harm to the
Company (other than as a consequence of good faith
decisions made by Consultant in the normal
performance of his duties).
5. The options granted herein shall be issued pursuant to a standard
option agreement approved by the Board of Directors of the Company.
16
EXHIBIT C-3
XXXX XXXXXXX STOCK XXXXX
1. 138 shares of common stock, no par value, of the Company, as
adjusted for stock splits, recapitalizations and similar events affecting the
common stock.
2. Exercise price shall be based on a valuation of Company of
$10,000,000. Hence, the exercise price shall be $2,778 per share of common
stock.
3. 68 shares of common stock granted pursuant to the option shall vest
as of April 30, 1999, and the additional 68 shares shall vest as of April 1,
2000.
4. The option shall be exercisable at any time after the shares
applicable thereto have been vested; provided (x) the options must be exercised
on the earlier to occur of (i) December 31, 2003 or (ii) the consummation of a
Material Transaction and (y) the options shall be forfeited and terminate (if
not previously exercised) if Employee is terminated for Cause (as hereinafter
defined) or voluntarily resigns before 6/11/2000 without the approval of a
majority of the Board.
(a) A Material Transaction shall mean the following:
(i) a Qualified Public Offering;
(ii) the merger or consolidation of the Company with
another entity in which the Company is not the surviving
entity (or survives only as a wholly owned subsidiary of
another entity) other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(iii) the sale of all or substantially all of the
assets of the Company; or
(iv) the dissolution and liquidation of the Company.
(b) A Qualified Public Offering shall mean any underwritten
offering by Company pursuant to an effective registration statement
under the Securities Act of 1933, then in effect, or any comparable
statement under any similar federal statute then in force.
(c) Cause shall mean:
(i) The willful and continued failure by
Employee to materially perform his duties after
demand for performance is delivered by the Company;
(ii) The engaging by Employee during the
term of employment in criminal conduct or conduct
constituting moral turpitude that is injurious to the
Company, monetarily or otherwise;
17
(iii) The embezzlement by Employee of any
funds of the Company; and/or
(iv) Acts of dishonesty or other acts by
Employee (including any breach of the terms,
conditions or covenants contained in his employment
agreement) that cause material adverse harm to the
Company (other than as a consequence of good faith
decisions made by employee in the normal performance
of his duties).
5. The options granted herein shall be issued pursuant to a standard
option agreement approved by the Board of Directors of the Company.
18
EXHIBIT C-4
XXXXX XXXX STOCK GRANT
1. 125 shares of common stock, no par value, of the Company, as
adjusted for stock splits, recapitalizations and similar events affecting the
common stock.
2. Exercise price shall be based on a valuation of Company of
$10,000,000. Hence, the exercise price shall be $2,778 per share of common
stock.
3. 63 shares of common stock granted pursuant to the option shall vest
as of April 30, 1999, and the additional 62 shares shall vest as of April 1,
2000.
4. The option shall be exercisable at any time after the shares
applicable thereto have been vested; provided (x) the options must be exercised
on the earlier to occur of (i) December 31, 2003 or (ii) the consummation of a
Material Transaction and (y) the options shall be forfeited and terminate (if
not previously exercised) if Employee is terminated for Cause (as hereinafter
defined) or voluntarily resigns before June 11, 2000 without the approval of a
majority of the Board.
(a) A Material Transaction shall mean the following:
(i) a Qualified Public Offering;
(ii) the merger or consolidation of the Company with
another entity in which the Company is not the surviving
entity (or survives only as a wholly owned subsidiary of
another entity) other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(iii) the sale of all or substantially all of the
assets of the Company; or
(iv) the dissolution and liquidation of the Company.
(b) A Qualified Public Offering shall mean any underwritten
offering by Company pursuant to an effective registration statement
under the Securities Act of 1933, then in effect, or any comparable
statement under any similar federal statute then in force.
(c) Cause shall mean:
(i) The willful and continued failure by
Employee to materially perform his duties after
demand for performance is delivered by the Company;
(ii) The engaging by Employee during the
term of employment in criminal conduct or conduct
constituting moral turpitude that is injurious to the
Company, monetarily or otherwise;
19
(iii) The embezzlement by Employee of any
funds of the Company; and/or
(iv) Acts of dishonesty or other acts by
Employee (including any breach of the terms,
conditions or covenants contained in his employment
agreement) that cause material adverse harm to the
Company (other than as a consequence of good faith
decisions made by Employee in the normal performance
of his duties).
5. The options granted herein shall be issued pursuant to a standard
option agreement approved by the Board of Directors of the Company.
20
EXHIBIT C-5
XXXXXX XXXXXXXX STOCK XXXXX
1. 125 shares of common stock, no par value, of the Company, as
adjusted for stock splits, recapitalizations and similar events affecting the
common stock.
2. Exercise price shall be based on a valuation of Company of
$10,000,000. Hence, the exercise price shall be $2,778 per share of common
stock.
3. 63 shares of common stock granted pursuant to the option shall vest
as of April 30, 1999, and the additional 62 shares shall vest as of April 1,
2000.
4. The option shall be exercisable at any time after the shares
applicable thereto have been vested; provided (x) the options must be exercised
on the earlier to occur of (i) December 31, 2003 or (ii) the consummation of a
Material Transaction and (y) the options shall be forfeited and terminate (if
not previously exercised) if Employee is terminated for Cause (as hereinafter
defined) or voluntarily resigns before 6/11/2000 without the approval of a
majority of the Board.
(a) A Material Transaction shall mean the following:
(i) a Qualified Public Offering;
(ii) the merger or consolidation of the Company with
another entity in which the Company is not the surviving
entity (or survives only as a wholly owned subsidiary of
another entity) other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(iii) the sale of all or substantially all of the
assets of the Company; or
(iv) the dissolution and liquidation of the Company.
(b) A Qualified Public Offering shall mean any underwritten
offering by Company pursuant to an effective registration statement
under the Securities Act of 1933, then in effect, or any comparable
statement under any similar federal statute then in force.
(c) Cause shall mean:
(i) The willful and continued failure by
Employee to materially perform his duties after
demand for performance is delivered by the Company;
(ii) The engaging by Employee during the
term of employment in criminal conduct or conduct
constituting moral turpitude that is injurious to the
Company, monetarily or otherwise;
21
(iii) The embezzlement by Employee of any
funds of the Company; and/or
(iv) Acts of dishonesty or other acts by
Employee (including any breach of the terms,
conditions or covenants contained in his employment
agreement) that cause material adverse harm to the
Company (other than as a consequence of good faith
decisions made by Employee in the normal performance
of his duties).
5. The options granted herein shall be issued pursuant to a standard
option agreement approved by the Board of Directors of the Company.
22
EXHIBIT D
FORM OF LENDER WARRANTS
