EXHIBIT 10.65
ADC
APPLIED DATA COMMUNICATIONS
May 15, 2001
Xx. Xxxxxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxx:
Your note agreement with Applied Data Communications, Inc. ("ADC") provides for
the exchange of such note into registered shares of ADC's common stock in
quantity to include all principal, interest and fees, at the rate of one share
for every $.80 of such principal, fees and interest.
ADC has been endeavoring to implement such conversion for the past several
weeks. We have been advised by counsel that the specific shares we anticipated
using for this purpose, would no longer be considered as "registered". Although
the shares were considered as registered at one time, their reacquisition by an
"affiliate" of ADC, as defined, changes their status to that of unregistered
shares.
Consequently, ADC is currently unable to provide such shares, pursuant to our
obligation to you. Reflecting on this, and in discussions with Xx. Xxxxxx X.
Xxxxx, an advisor to the company, ADC is offering an alternative conversion
program which we believe will be beneficial to you.
ADC is offering to convert your note into ADC preferred stock, Series B, which
is convertible into common shares, at the rate of 100 shares of common for each
share of the Series B preferred stock, with voting privileges based on the
number of common shares into which the Series B preferred stock is convertible.
As Xxxxxx xxx have already have advised you, as a further acknowledgment of the
alteration this represents to your agreement, ADC is offering to adjust the
number of Series B preferred shares upward by 20%. This will provide to you an
additional 20% common shares, over that to which you would otherwise have
received. ADC will convert such Series B shares to common shares, and to
register such shares within the fourth calendar quarter of 2001.
Should you elect not to accept this offer, ADC will provide registered common
shares prior to the end of ADC's fiscal third quarter.
ADC apologizes for the inconvenience this may represent to you, and sincerely
hopes that you will find this to be an acceptable compensation for the
accommodation we are requesting.
Anticipating your continued support, we are enclosing a new certificate for the
appropriate number of Series B shares. We request that you acknowledge receipt
of such shares, by executing the duplicate copy of this document below, and
returning it to ADC.
Thank you once again for your continued support.
0000 Xxxxx Xxxxx Xxxxx Xxx Xxxxxxxxxx 00000 Phone 000.000.0000
Fax 000.000.0000
Sincerely,
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Chief Executive Officer
AGREED AND ACCEPTED:
(Name)
(Date)
AGREEMENT
WHEREAS, Applied Data Communications, Inc., ("ADC" or Borrower") requires
additional financing to capitalize on business opportunities, presently
available to it, and Xxxxxxxx X. Xxxxxx ("Lender") is willing to provide such
financing ("Borrowing") under terms and conditions as set forth below,
NOW THEREFORE, ADC and Lender (collectively "Parties"), in exchange for the
foregoing and other good and valuable consideration, do hereby agree and
covenant as follows:
1. Amount of Borrowing.
Amount of the Borrowing shall be $50,000.
2. Rate, Fees.
Borrower shall compensate Lender with interest paid monthly, in the amount of 1%
per month, in addition to administrative fees paid monthly, in the amount of 1%
per month. All interest and fees as computed hereunder shall be due by the
tenth calendar day of each month, for the prior month. Lender may also grant to
Borrower the right to pay interest and fees in registered common shares of the
Borrower's stock, valued at $.80 per share, with said shares to be issued within
thirty (30) days of payoff of the note. Should Lender permit Borrower to pay
interest and fees in registered common shares, prior to maturity of the note,
the number of such shares paid will assume the note was held to maturity.
3. Term, Prepayment.
Amount of the Borrowing shall be repayable in its entirety on May 31, 2001.
Said Borrowing may be repaid in whole or in part, by the Borrower, without
premium or penalty, at any time prior to the Maturity Date, at the option of the
Borrower, provided, however, that the Lender shall be entitled to retain all
options as defined under paragraph 4 hereunder, regardless of whether borrowing
is prepaid.
4. Additional Consideration.
Borrower shall grant Lender options to purchase 62,500 shares of registered
common stock of the Borrower, at a price of $.80 per common share, such options
being available for a period of twenty-four months, commencing with the date of
this note.
5. Extension.
Parties agree that the note may be extended on a month-to-month basis, after the
maturity date indicated herein, at the sole discretion of the Lender. Should
the lender agree to such extension(s) Borrower agrees to pay such interest and
fees, at the same rates as indicated above, and to provide Lender with
additional options to purchase additional shares of registered common stock of
Borrower, at a price of $.80 per share, at the rate of 6,250 options for each
month extended. All options awarded pursuant to this paragraph, shall have a
life of twenty-four months, subject to provisions of paragraph 4, above.
6. Legal and Collection Fees.
Xxxxxxxx agrees to compensate Lender for reasonable legal and collection fees
and expense incurred by Xxxxxx, in the event that Borrower is unable to repay
Borrowing when due.
7. Default, Waivers.
Note shall be in default, should principal, interest or fees remain unpaid for
more than ten days, after the end of the month. Failure of Lender to declare a
default shall not constitute a waiver or of such default or of any subsequent
default. No delay on the part of the Lender in exercising any power or right
under this Agreement shall operate as a waiver of the power or right, nor shall
any single or partial exercise of any power or right preclude further exercise
of that power or right. The rights and remedies specified herein are cumulative
and not exclusive of any rights and remedies that the Lender may otherwise
possess.
8. Modification.
The terms of this Agreement shall not be varied, altered or modified except in
writing signed by the Borrower and the Lender.
9. Conversion.
Conversion of borrowings as defined hereunder, shall occur on or before March
31, 2001. Xxxxxx agrees to convert principal amount $50,000 to 62,500 shares of
the Borrower" registered common stock (price of $.80 per common share).
10. Jurisdiction, Arbitration
The provisions of this Agreement are to be construed according to, and are to be
governed by the laws of the State of California.
IN WITNESS WHEREOF, Parties acknowledge their agreement with the aforementioned
terms and conditions, by their signatures, as indicated below.
Applied Date Communications, Inc.
By: /s/ Xxxxxx X. Xxxx /s/ Xxxxxxxx X. Xxxxxx
Xxxxxx X. "Pat" Xxxx Xxxxxxxx X. Xxxxxx
Xxxxxx
0000 Xxxxx Xxxxx Xxxxxx 000 Xxxx 00xx Xxxxxx
Xxxxx Xxx, XX 00000 Xxx Xxxx, XX 00000
Its: Chief Executive Officer
Date: Nov. 2, 2000 Date:
ADDITIONAL NOTE HOLDERS
NAME LOAN AMOUNT DATE PAYABLE
Xxxx X. Xxxxxxxxxx $25,000.00 3/31/01
0000 00xx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
Xxxxx X. and Xxxxx X. Xxxxxxxxxx $25,000.00 3/31/01
00000 Xxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
Xxxxxx X. Xxxxx $50,000.00 3/00/00
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
