EXHIBIT 4.14
xxxxxx.xxx, Inc.
0000 X. Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
August 16, 2000
To: The trade creditor of
xxxxxx.xxx, Inc. identified
on the signature page of this
letter agreement (the "Trade Creditor")
Ladies and Gentlemen:
xxxxxx.xxx, Inc. ("the Company") and xxxx.xxx, Inc. ("you") are
parties to a License and Distribution Agreement dated February 24, 2000 (the
"Agreement"). Under the terms of the Agreement, the Company is obligated to make
monthly payments to you in the amount of $102,777 per month. You have agreed to
forgive the monthly payments owed to you by the Company for the period of July
2000 through September 2001 in exchange for the Compromise Amount (as defined
below).
The purpose of this letter agreement is to confirm that we have agreed
that the Company will pay to you, within two business days following the closing
of the proposed preferred stock financing described in the Confidential Private
Placement Memorandum dated July 12, 2000 and the related cumulative supplement
dated August 16, 2000 (the "Permanent Financing"), the sum in cash identified on
the signature page of this letter agreement (the "Cash Payment") and securities
of the Company as described in Attachment A (the "Securities" and, together with
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the Cash Payment, the "Compromise Amount"). Attachments A and B describe the
terms of and contain representations and warranties with respect to the issuance
of the Securities and constitute a part of this letter agreement. The
Compromise Amount will represent full and final payment of the Company's
obligation to pay the 15 regularly scheduled monthly payments due under the
Agreement beginning with the payment due July 25, 2000 and ending with the
payment due September 25, 2001. The Company will resume regular monthly cash
payments beginning with the payment due October 25, 2001. The compromise of the
amounts due to you made in this letter agreement is irrevocable.
In consideration for the Compromise Amount, you hereby voluntarily
release and forever discharge the Company and its subsidiaries, affiliates,
directors, officers, employees, stockholders, agents and representatives, and
each of their successors and assigns (the "Releasees") from, and covenant not to
xxx or proceed against the Releasees on the basis of, any and all past or
present causes of action, suits, agreements, losses, damages, debts, accounts,
expenses, obligations, liabilities or other claims, known or unknown, against
the Releasees in respect of any and all (i) past or present contractual
obligations or liabilities, including trade receivables, (ii) claims for
repayment of indebtedness for borrowed money and (iii) past or present claims
for repayment of amounts owed to you arising under bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or other similar laws affecting
creditors' rights and the relief of debtors generally.
This letter agreement shall terminate and be of no further force or
effect in the event that the Permanent Financing has not closed and the Company
has not delivered the Compromise Amount to you by September 15, 2000.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below. This letter agreement may be
executed in counterpart.
Sincerely yours,
xxxxxx.xxx, Inc.
By: /s/ Xxxxx X. Xxxxxxx-Xxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx-Xxxx
Title: CFO
The foregoing is hereby acknowledged and agreed to as
of the date first above written.
Name of Trade Creditor: xxxx.xxx, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Corporate Secretary, VP-Finance
Cash Payment: $154,166
Securities: See Attachment A
Amount of current and future
obligation to be satisfied by
virtue of this letter agreement: $1,541,663
2
ATTACHMENT A
Description of the Securities
Form of Security: Common Stock
----------------
Issue Price: $0.80 per share.
-----------
Number of Shares: 1,927,079 shares
----------------
Legends: Each certificate representing the Securities will be endorsed
------- with the following legend (in addition to any legend required
under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENT OF SAID
ACT.
Registration: The Company will include the Securities in the first
------------ registration statement (other than a registration relating to
employee benefit plans or pursuant to Rule 145 promulgated
under the Securities Act of 1933, as amended (the "Securities
Act")) filed by the Company with the Securities and Exchange
Commission following the date of this Agreement in order to
permit the resale of such Securities into the public market.
The Company will use its best efforts to file said
registration statement to permit the resale of the securities
by September 30, 2000 and to cause such filing to become
effective as quickly as reasonably practicable. The Trade
Creditor will provide any information about itself necessary
to facilitate the registration and will deliver a prospectus
in connection with any sale and otherwise abide by reasonable
procedures as established by the Company imposed upon selling
stockholders generally or as otherwise required to comply
with applicable law. To the extent reasonably requested by
the Trade Creditor, the Company shall provide the Trade
Creditor with information regarding the filing of the
registration statement including the Securities, including
but not limited to, the registration agreement itself.
A-1
ATTACHMENT B
Representations and Warranties
A. Representations and Warranties of the Trade Creditor. In connection
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with the transfer of the Securities, the Trade Creditor represents to the
Company the following:
1. Experience. The Trade Creditor is an "accredited investor" as
----------
defined in Regulation D under the Securities Act. The Trade Creditor is also
knowledgeable, sophisticated and experienced in making, and is qualified to make
decisions with respect to investments in securities such as this one, including
investments in securities issued by the Company and investments in comparable
companies, and has the ability to bear the economic risks of the investment.
2. Investment. The Trade Creditor is acquiring the Securities for
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investment for such Trade Creditor's own account and not with the view to, or
for resale in connection with, any distribution thereof. The Trade Creditor
understands that the Securities have not been registered under the Securities
Act of 1933 by reason of a specific exemption from the registration provisions
of the Securities Act which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein. The Trade Creditor further
represents that he, she or it does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to any
third person with respect to any of the Securities. The Trade Creditor
understands and acknowledges that the sale of the Securities by the Company to
the Trade Creditor will not be registered under the Securities Act on the ground
that this sale and the issuance of securities hereunder is exempt from the
registration requirements of the Securities Act.
3. Rule 144. The Trade Creditor acknowledges that the Securities
--------
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. The Trade Creditor is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permit limited resale of securities purchased in a private placement subject to
the satisfaction of certain conditions, including, in case the Trade Creditor
has held the securities for less than two years or is an affiliate of the
Company, among other things: the availability of certain current public
information about the Company, the resale occurring not less than one year after
a party has purchased and paid for the securities to be sold, the sale being
through a "broker's transaction" or in transactions directly with a "market
maker," and the number of shares being sold during any three-month period not
exceeding specified limitations. The Trade Creditor covenants that, in the
absence of an effective registration statement covering the securities in
question, the Trade Creditor will sell, transfer, or otherwise dispose of the
Securities only in a manner consistent with such Trade Creditor's
representations and covenants set forth herein.
4. Access to Information. The Trade Creditor has received and
---------------------
reviewed the Company's Confidential Private Placement Memorandum, dated as of
July 12, 2000, as
B-1
supplemented by the Cumulative Supplement, dated as of August 16, 2000
(including, without limitation, the section captioned "Risk Factors"), and has
had an opportunity to discuss the Company's business, management and financial
affairs with its management.
B. Representations and Warranties of the Company.
---------------------------------------------
1. Organization. The Company is duly organized and validly existing
------------
in good standing under the laws of the state of Texas. The Company has full
corporate power and corporate authority to own, operate and occupy its
properties and to conduct its business as presently conducted. The Company is
registered or qualified to do business and in good standing in each jurisdiction
in which it owns or leases property or transacts business and where the failure
to be so qualified would have a material adverse effect upon the financial
condition of the Company.
2. Due Authorization; Legal, Valid and Binding Agreement. The
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Company has all requisite legal and corporate power and authority to execute,
deliver and perform its obligations under this agreement. To the extent any
shares of common stock are being issued to the Trade Creditor, such shares shall
be duly authorized, validly issued, fully paid and nonassessable. This
agreement has been duly authorized and validly executed and delivered by the
Company and constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3. Exemption from Securities Act. Assuming the representations and
-----------------------------
warranties of the Trade Creditor made in Section A above are true and accurate,
the Securities being issued by the Company to the Trade Creditor are exempt from
the registration requirements of the Securities Act.
4. Disclosure. No representations or warranties made by the Company
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in this letter agreement or the Confidential Private Placement Memorandum dated
July 12, 2000 and the related cumulative supplement dated August 16, 2000
(collectively, the "PPM"), taken as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. The foregoing notwithstanding, no
representation is made regarding the ultimate size of the preferred stock
financing described in the PPM or the terms thereof.
B-2
