EXHIBIT 10.16
August 31, 1999
Mr. Xxxx Xxxxxx
0000 Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
RE: LOAN GUARANTY
Dear Xx. Xxxxxx:
Reference is made to the attached commitment letter from Riverside Bank to CV
Dynamics, Inc. (the "Company") relative to the financing described therein and
your personal guaranty of the Company's obligations described in the commitment
letter (attached).
Subject to the completion of such financing and your execution of the various
loan guaranty documents, the Company agrees to compensate you for your
undertaking as follows:
1. GUARANTEE FEE. The Company agrees to pay you a one-time fee in the
amount of $75,000, payable in monthly installments of $5,000 each
commencing with the month the Company closes the financing.
2. WARRANT. The Company agrees to issue to you a five year warrant for the
purchase of 100,000 chares of the Company's common stock at an exercise
price of $2.00 per share. These warrants will be issued in two equal
portions, the first 50,000 will be issued at the execution of the
agreement with the bank, the second 50,000 will be issued at the time
the bank converts the debt note to a three year mortgage term. The
warrant shall contain customary anti-dilution provisions in the event
of capital changes (stock splits, dividends, etc.) and customary
incidental registration rights. In addition, the warrant will permit
you to effect a "cashless exercise" related to the market price
established by any bona fide private placement with an unrelated party,
any public offering or acquisition or merger price in a transaction
with an unrelated party. The Company will have the right to call and
redeem the warrant on a cashless exercise basis if the Company
completes a bona fide private placement or enters into an underwriting
agreement to effect a public offering of its common stock at a price
per share which is at least one hundred percent greater than the
exercise price of the warrant. The Company will give you not less than
thirty days prior written notice of its intention to call and redeem
such warrant, during which notice period you will have the right to
exercise your warrant on a cashless or non-cashless basis.
If the foregoing is satisfactory, please sign and return one copy of this
letter.
Very truly yours,
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Ph.D.
President and Chief Executive Officer
Confirmed and acknowledged this ____ day of August, 1999.
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
