EXHIBIT 10.66
To: Virtual Mortgage Network, Inc.
Bridge Debt Holders
Attention
Firm Name
Address
City, State, Zip
Dear:
This letter agreement is made and entered into as of February 2, 1998 by
and between Virtual Mortgage Network, Inc. and the person identified on the
signature page hereto ("Bridge Debt Holder").
The purpose of this letter agreement is to set forth the terms under which
the Bridge Debt Holder agrees to convert its outstanding debt principal and
accrued interest up to the effective date of the initial public offering of the
Company's common stock (the "IPO") into Series B Preferred Stock and Common
Stock to be issued simultaneously with the effectiveness of the IPO.
Exhibit A attached is the proposed instrument. It is a Series B Preferred
with several key components for the conversion of the debt principal.
1) Convertible Redeemable, non-voting Preferred shares with the following
features:
A) Liquidation value of $9.50 per share paid after the Company's
existing Series A Preferred which have a liquidation value of
$1.10 per share. There are 2,250,000 authorized Series A Preferred
shares.
B) The Series B Preferred are convertible into Common at a price of
$9.50 per share.
C) Redeemable at the Company's option at any time, at various levels
of redemption premiums as per Exhibit A, but after the Company has
offered to redeem the Series A Preferred and has completed any
redemption so requested.
In addition, the Company, if the "Greenshoe" has been exercised by the
underwriters in the IPO, will commence redeeming the Series B Preferred
on a pro-rata basis to the extent of the net proceeds of the
"Greenshoe" subject to the consent and, if requested, prior redemption
of the Series A Preferred Stock. The Company will not have any other
obligation to redeem the Series B Preferred Stock.
D) The conversion of the debt principal will be at $9.50 of debt per
share to determine the number of Series B Preferred shares.
E) Other provisions of importance are on Exhibit A.
F) Accumulated interest to the effective date of the IPO will be
converted into Common Stock at $7.50 of interest per share, the
expected IPO Offering price.
G) The Series B Preferred shares, the common shares into which they
may be converted and the Common Stock issued in exchange for
interest are hereby
made subject to the Provisional Lock-up Agreement requested by the
underwriters.
As previously noted, Xxx Capital Company made a loan to the Company
evidenced by a $1.3 million note. You affirm that:
1) Xxx Capital Company is entitled to the rights of a party to the
current Bridge Debt Security and Intercreditor Agreement.
2) In the event of a bankruptcy, the Bridge Debt Holders agree to
appoint a majority of the creditors committee from persons
designated by Xxx Capital Company.
The foregoing two items regarding Xxx Capital Company merely confirm your prior
consent and approval.
Since we are attempting to refile with the SEC in the next few days, we are
asking for your prompt consent and agreement to the above items.
At the end of this letter, we have provided various consent sections so
that you can signify your approval to this request by item.
By signing this letter agreement, the undersigned acknowledges that it
supersedes all prior letter agreements and understandings of the parties on this
subject. The undersigned also confirms that they are familiar with the terms and
conditions of the Provisional Lock-up Agreement requested by the underwriters.
We realize you may have questions and I encourage you to call me at (714)
000-0000 (if I am unavailable, please ask for Xxxxx Xxxxxx so she can pull me
from whatever I am doing to speak to you to avoid phone tag). In addition,
please feel free to speak with our underwriter, Xx. Xxxx Xxxxxxxx, Managing
Director of Barrington Capital at (000) 000-0000.
Sincerely,
________________________________
Xxxx X. Xxxxxx
President - CFO - COO
cc: Xxxx Xxxxxxxx, Barrington Capital
Conversion of Bridge Debt and accumulated interest to Series B Preferred Stock
and Common Stock.
________________________________________
Approved
Approval to extend maturity date of Bridge Debt from January 6, 1998 to March
20, 1998.
________________________________________
Approved
Approval for Virtual Mortgage to extend Bridge Debt by up to $2,000,000.
________________________________________
Approved
Approval for Xxx Capital Company to participate in Bridge Debt Security
Agreement and Intercreditor Agreement.
________________________________________
Approved
Approval that Bridge Debt Holder agrees to elect Xxx Capital Company designees
to a majority of a creditor committee in the event of Bankruptcy.
________________________________________
Approved
Virtual Mortgage Network, Inc.
Bridge Conversion Proposal
- Convert face value of Bridge Debt into Convertible Redeemable, non-voting
Series B Preferred Shares with the following terms and conditions:
- Dividend rate of 9.9% of liquidation value paid when declared and paid only
after dividends are paid in full on Series A Preferred Stock.
- Liquidation value of $9.50 per share, paid only after Series A is paid.
- Convertible into Common at a price of $9.50 per share;
- Redeemable by the Company at any time (after the Company has offered to
redeem the Series A Preferred Stock and has completed any redemption so
requested) including out of the proceeds of the IPO "Greenshoe", at the
following redemption premiums:
- 105% plus accrued interest until August 1, 1998;
- 110% plus accrued interest from 8/1/98 through 1/31/1999;
- 115% plus accrued interest from 2/1/99 through 1/31/00;
- 125% plus accrued interest from 2/1/00 through 1/31/01;
- 140% plus accrued interest from 2/1/01 through 1/31/02;
- 155% plus accrued interest from 2/1/02 through 1/31/03;
- 170% plus accrued interest from 2/1/03 through 1/31/04;
- 185% plus accrued interest from 2/1/04 through 1/31/05;
- 200% thereafter.
ATTACHMENT I
VIRTUAL MORTGAGE NETWORK, INC.
LIST OF INVESTORS EXCHANGING DEBT
COMMON
SERIES B SHARES
PREFERRED (ASSUMES
NAME DEBT PRINCIPAL SHARES 3/6/98)
--------------------------------------------------------------------------------
Anacapa Ventures $ 50,000 5,263 1,617
Boston Provident Partners 885,000 93,158 19,141
BP Institutional Partners LP 40,000 4,211 1,284
Maritime Global Subsidiary I, Ltd. 75,000 7,895 2,424
Daystar Partners 205,000 21,579 6,170
Xxxxxx, Xxxxxxx 85,000 8,947 2,843
Xxxxxxx, Xxxxxxx 500,000 52,632 12,611
Xxxxx, Xxxxxx 25,000 2,632 808
Xxxxx Global Investments, Ltd. 500,000 52,632 12,100
Xxxxx Global Investments, Ltd. 1,000,000 105,263 29,622
Xxxxxxx, Xxxxxx 25,000 2,632 769
Xxxxxxxx, Xxxxx 57,500 6,053 1,802
Xxxxxxxx, Xxxxx 100,000 10,526 2,473
Sundance Ventures 600,000 63,158 18,467
Xxxxx, Xxxxx 42,500 4,474 1,416
--------------------------------------------------------------------------------
AMENDMENT NO. 1 FILING TOTAL $4,190,000
Xxxxxxxx, Xxxxx 50,000 5,264 1,417
Xxxxx, Xxxx 15,000 1,579 667
--------------------------------------------------------------------------------
AMENDMENT NO. 2 FILING TOTAL $4,255,000 447,898 115,631
