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EXHIBIT 99.2
(NEVADA MANHATTAN MINING LETTERHEAD)
August 28, 1998
TiNVl, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Gentlemen:
As an inducement to TiNV1, Inc. ("TiNV1") to enter into the Subscription
Agreement dated as of August 28, 1998, whereby TiNV1 has agreed to subscribe
initially for Five Million, Five Hundred and Fifty Thousand (5,500,000) shares
of common stock ("Subscription Shares") of Nevada Manhattan Mining, Inc. (the
"Company") for Five Hundred Thousand Dollars ($500,000.00) in capital, we hereby
agree to the following:
1. The Board of Directors of the Company will immediately institute the
expansion of the Company's Board of Directors to a total of seven members.
2. Three designees of TiNVl will upon such expansion be elected to the Board of
Directors of the Company.
3. Thereafter, three designees of TiNV1, subject to increase or decrease, as
provided below, will be included in management's slate of nominees for the Board
of Directors, and the Company will use its continuing best efforts to cause such
nominees to be elected to the Board. The number of TiNV1's designees shall
coincide with the number of directors that TiNV1 is entitled to elect pursuant
to paragraph 5 below.
4. The nominees proposed by TiNV1 from time to time shall possess such
qualifications, character and reputation as are reasonably appropriate for
members of the Board of Directors of the Company.
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5. The Company shall use its best efforts to create a class of preferred stock
("Preferred Stock") which possess attributes, rights, privileges, and
preferences, which are no less favorable than those of the common stock
comprising the Subscription Shares. Upon creation of the Preferred Stock, the
Company shall have the right to exchange the common stock comprising the
Subscription Shares to Preferred Stock on a one for one basis. The Preferred
Stock shall be converted back into common stock in connection with any
securities registration of the subject securities under the Securities Act of
1933, as amended. TiNV1 shall be the sole holder of the Preferred Stock. Subject
to paragraph 6, TiNV1, as holder of the Preferred Stock, voting as a separate
class, shall be entitled to elect three Directors, as long as the Company's
Board of Directors consists of seven members. If the number of members of the
Board of Directors increases (or decreases), then the Preferred Stock's right to
elect Directors shall increase (or decrease) by one director for every increase
(or decrease) of two members of the Board of Directors. For example, if the
Board of Directors is increased to nine members, then TiNV1 shall have the right
to elect four Directors.
6. Notwithstanding the foregoing, if TiNV1's beneficial ownership of its
Subscription Shares, whether in the form of common stock or Preferred Stock
drops below 2,750,000 or 1,375,000 shares, respectively, adjusted for stock
dividends, merger, reorganization, reclassification, stock splits, or any other
adjustment to the Company's capital structure, then the number of Directors that
TiNV1 shall have a right to nominate and/or elect shall be reduced by one-third
and two-thirds, respectively. TiNV1's right to nominate and/or elect Directors
pursuant to paragraphs 3 and 5 shall terminate if its beneficial ownership of
the Subscription Shares drops below 550,000 shares.
7. TiNV1 agrees to vote the maximum number of votes it has, per candidate, for
its designated director nominees unless the voting for the election of directors
is subject to cumulative voting. If TiNVl's nominees are not elected to the
Board of Directors of the Company as provided in paragraphs 3 and 5, TiNV1 shall
have the right for a 60-day period thereafter to put any or all of its
Subscription Shares, whether common stock or Preferred Stock (collectively "Put
Stock"), as the case may be, then held by it to the Company at a price, which is
the greater of: (a) the purchase price therefor, or (b) the average price
established by an independent valuation as of the date of the corporate action
giving rise to the valuation, by two of the present "Big 5" accounting firms, or
their sucessors. TiNV1 and the Company shall each appoint an accounting firm to
perform a valuation of the Subscription Shares ("Put Price") within thirty (30)
days of the event giving rise to the valuation. The respective accounting firms
shall submit their valuations within thirty (30) days after their respective
appointment. The Company shall purchase the Put Stock from TiNV1 within thirty
(30) days of its receipt of the subject valuations from the accounting firms.
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8. If the Company has insufficient legally available funds to purchase the Put
Stock, then the subject 60 day period shall not commence until the Company has
legally available funds to purchase the Put Stock. Further, if the Company has
insufficient legally available funds to purchase the Put Stock, then at TiNV1's
election, it may sell its Subscription Shares to a bona fide third party. The
Company shall issue a promissory note ("Note") to TiNV1 for the difference
between the Put Price and the third party sale. The unpaid principal balance
shall bear interest at the rate of Bank of America's (or successor thereto) then
prime rate plus 2 points. To the extent legally permissible, the unpaid
principal and accrued interest thereon shall be fully amortized and paid in
quarterly installments, with the first payment due and payable ninety days after
the date of the subject note. To the extent legally permissible, the remaining
unpaid principal and accrued interest thereon shall be due and payable on the
second anniversary of the Note. The Company may prepay the balance of the note
without penalty. If Company is in default under the Note, then TiNV1 shall be
entitled to recover its costs from the Company, including attorneys' fees to
enforce collection under the Note.
9. All acquisitions and divestitures by the Company, which require Board
approval, and any issuances of securities to the Company's debenture holders,
must initially be approved by 5 of the Company's 7 Directors. If the Board of
Directors increases in size, then such acquisitions, divestitures, and any
issuance to the debenture holders must he approved by a super majority vote of
two thirds of all members of the Board of Directors, and not a super majority of
a quorum of the Board of Directors.
10. The Company hereby agrees to enter into an employment agreement with Xxxxxx
Xxxxxx Xxxxxxxxx of Los Angeles, California, for a period of not less than one
year. Xx. Xxxxxxxxx will be designated as a Vice President of Financing, with
his duties to encompass the financial expansion of the Company, and such other
duties as are designated by the Board of Directors. Xx. Xxxxxxxxx shall receive
compensation in the amount of $3,000.00 per month.
11. The Company represents and warrants to TiNV1, which shall survive without
limitation, that it has the full right, power and authority to execute, deliver,
perform and comply with the terms and conditions of this agreement, and that it
has taken all other actions necessary to enable the Company to comply with the
terms and conditions hereof. This letter agreement has been duly and validly
executed and delivered by the Company and constitutes the valid and legally
binding obligation of the Company.
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12. This Agreement shall be governed by and construed in accordance with the
laws of the State of California. If any provision of this Agreement is found by
a court of competent jurisdiction to be invalid, illegal, or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not be
affected thereby.
13. If any party to this Agreement shall commence any suit or action to
interpret or enforce this Agreement, the prevailing party in such action shall
recover such party's costs and expenses incurred in connection therewith,
including attorneys' fees. 14. This Agreement shall inure to the benefit of and
be binding upon all of the parties hereto and their respective, executors,
administrators, successors and assigns.
Sincerely,
NEVADA MANHATTAN MINING
INCORPORATED
/s/ Xxxxxxxxxxx X. Xxxxxxxx
By:____________________________
Xxxxxxxxxxx X. Xxxxxxxx, President
/s/ Xxxxxxx X. Xxxxxx
By:____________________________
Xxxxxxx X. Xxxxxx, Secretary
ACKNOWLEDGED AND AGREED:
as of Aug. 28th
DATED: ______________, 1998 TiNV1, INC.
/s/ Xxxxxx Xxxxxxxx
By:____________________________
Xxxxxx Xxxxxxxx,
President and Secretary
