LIFERATE SYSTEMS, INC.
0000 XXXXX XXXXXXXXX * XXXXX, XX 00000
(000) 000-0000 * Fax: (000) 000-0000
November 10, 1997
APF, LLC
c/o Xxxxxxx X. Xxxxxxx, M.D.
0000 X.X. Xxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Dear Xx. Xxxxxxx:
Reference is made to (i) the Modification Agreement dated as of March 25, 1997
(the "Modification Agreement") by and among LifeRate Systems, Inc. (the
"Company") and you relating to the amendment of certain terms set forth in the
Prior Agreement (as such term is defined in the Modification Agreement); (ii)
the Consulting Agreement dated as of March 25, 1997 between you and the Company
(the "Consulting Agreement "); (iii) a Non-Statutory Stock Option Agreement,
dated March 4, 1997 (the "Option Agreement"), covering options to purchase
550,000 shares of common stock, no par value ("Common Stock"); (iv) two
Non-Statutory Stock Option Agreements, each dated March 4, 1997 (the "Other
Option Agreements"), covering options to purchase an aggregate of 36,333 shares
of Common Stock and (v) the Master Agreement dated as of March 25, 1997 between
the Company, APF, LLC ("APF) and Xx. Xxxxxxx. As we have discussed, the
investors in our impending private placement offering of approximately 9,000,000
shares of Common Stock (the "Shares") at $.50 per share and approximately
9,000,000 warrants (the "Warrants") to purchase shares of Common Stock (the "New
Financing") are requiring, as a condition to closing that offering, that we
obtain certain agreements from some of our major creditors.
Accordingly, notwithstanding anything in the Consulting Agreement, the
Modification Agreement, the Prior Agreement, the Option Agreement, the Other
Option Agreements or the Master Agreement to the contrary, we hereby request
that you agree to the following modifications and amendments to the Consulting
Agreement, the Modification Agreement, the Prior Agreement, the Option
Agreement, the Other Option Agreements and the Master Agreement, which
modifications and agreements are to become effective upon, and are subject to
the consummation of, the first closing of the New Financing, which closing will
relate to approximately 2,500,000 Shares and approximately 2,500,000 Warrants
(the "First Closing"), on or before November 21, 1997:
(i) Consulting Agreement. The Consulting Agreement is hereby terminated
in its entirety effective as of the First Closing, and all rights,
obligations and amounts owing or to become due and payable in the
future by either party thereunder are extinguished and deemed
satisfied.
(ii) Modification Agreement and Prior Agreement. All "milestone royalty
payments" payable by the Company under Section 6.2 of the Modification
Agreement, in the aggregate amount of $450,000, shall be terminated and
extinguished effective as of the First Closing.
(iii) Option Agreements. The Option Agreement is revised, effective as
of the First Closing, as follows: (x) the number of shares covered
thereby is reduced from 550,000 shares to 200,000 shares and (y) the
"Option Exercise Price" is changed to $1.00 per share (as so modified,
the "Amended Option Agreement"). In addition, Xx. Xxxxxxx and APF agree
not to sell or otherwise transfer any shares of Common Stock, purchased
upon exercise of the Amended Option Agreement or the Other Option
Agreements, before January 1, 2000.
(iv) Anti-Dilution. There shall be no further adjustment to the Option
Exercise Price of the Amended Option Agreement, nor shall there by any
other anti-dilution adjustment in the number of shares purchasable
thereunder, resulting from (x) the issuance of the Shares, the
Warrants, shares of Common Stock underlying the Warrants and any
Default Shares (as defined in the Securities Purchase Agreement
pursuant to which the Shares shall be sold), (y) any and all
conversions of existing debt of the Company into shares of Common Stock
in connection with the New Financing and (z) any and all other
transactions, including without limitation issuance's of options or
warrants, or adjustments to the exercise prices of existing options,
warrants or convertible notes that are being made in connection with
the New Financing and set forth on Schedule 6(j) to the Securities
Purchase Agreement (a copy of which Schedule is attached hereto).
(v) Waiver of Board Seat. APF and Xx. Xxxxxxx permanently waive their
rights under Section 7.4(a) of the Master Agreement to have Xx. Xxxxxxx
nominated, and recommended to be elected, to the Company's Board of
Directors; provided that nothing herein shall affect the right under
Section 7.4(b) granted to Xx. Xxxxxxx to personally have "observer"
status (which right is not assignable).
(vi) Waiver of Registration Rights. From the date hereof and until
January 1, 2000, APF and Xx. Xxxxxxx hereby waive all of their rights
under Section 7 of the Amended Option Agreement and the Other Option
Agreements to have the issuance of the Option Shares (as defined in the
Amended Option Agreement and the Other Options Agreements) registered
under the Securities Act of 1933, as amended.
Except as modified above, the Modification Agreement, the Prior Agreement, the
Amended Option Agreement, the Other Option Agreements and the Master Agreement
shall continue in full force and effect.
Please acknowledge your agreement to the foregoing by signing and returning the
enclosed copy of this letter.
Very truly yours,
LIFERATE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------
President & CEO
ACKNOWLEDGED AND AGREED TO
THIS 15TH DAY OF NOVEMBER, 1997:
APF, LLC
By: /s/ Xxxxxxx X. Xxxxxxx, M.D.
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