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EXHIBIT 10.25
INDUCEMENT AGREEMENT
THIS INDUCEMENT AGREEMENT ("Agreement") dated March 30 , 1999 and is
entered into by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇ ▇▇▇▇ SERVICE
CORPORATION, a California corporation ("Cal West"), and MICRO GENERAL
CORPORATION, a Delaware corporation ("MGC").
Whereas, ▇▇▇▇▇▇▇▇ has significant expertise in the
telecommunications industry; and
Whereas, the major shareholders of MGC, a computer and
telecommunications company, desire to utilize ▇▇▇▇▇▇▇▇'▇ expertise to grow MGC
by strategic acquisitions; and
Whereas, ▇▇▇▇▇▇▇▇ is willing to provide his expertise to MGC's
management;
Now, therefore, it is agreed as follows:
1. ▇▇▇▇▇▇▇▇ has agreed to provide advice and counsel on strategic
acquisitions for MGC for a period of two years from August 11, 1998 and has been
providing such advice and counsel since August 11, 1998.
2. As compensation for the services ▇▇. ▇▇▇▇▇▇▇▇ renders to MGC, MGC,
agrees to issue certain convertible debt and warrants of MGC to ▇▇▇▇▇▇▇▇; one
half on March 31, 1999 and one half on January 1, 2000 consisting of:
100,000 warrants having an exercise price of $1.50 per warrant;
and
$500,000 of face indebtedness of convertible debt of MGC with an
average conversion price of $2.25.
Said issuance shall occur in two equal parts, half on March 31,
1999 and half on January 1, 2000. In the event that ▇▇▇▇▇▇▇▇'▇
consulting relationship with MGC terminates for any reason
whatsoever prior to January 1, 2000, the convertible debt and
warrants which are not vested will vest on January 1, 2000.
CalWest agrees to transfer all rights granted to it in the above listed warrants
and convertible debt back to MGC over the period described above with the
understanding that CalWest will be repaid by MGC as said transfers to ▇▇▇▇▇▇▇▇
occur pursuant to the Convertible Note Purchase Agreement and ancillary
documents and the Loan Agreement and Agreement to Issue Detachable Warrants and
ancillary documents relative to the convertible debt and warrants.
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3. ▇▇▇▇▇▇▇▇ will be and at all times during the term of this Agreement
shall remain an independent contractor. As such, ▇▇▇▇▇▇▇▇ shall have sole
control over the manner and means of performing the services outlined in
Paragraph 1 above. Nothing in this Agreement or in any subsequent modifications
hereto shall be interpreted to create any relationship of employer/ employee,
principal/agent, partnership or joint venture. ▇▇▇▇▇▇▇▇ shall have no power to
obligate, commit or legally bind the other parties in any manner whatsoever, and
the other parties shall have no liability to ▇▇. ▇▇▇▇▇▇▇▇ or to others for any
acts or omissions of ▇▇▇▇▇▇▇▇. It is acknowledged and agreed that ▇▇▇▇▇▇▇▇ has
numerous business commitments and he shall not be obligated to devote any
particular amount of time to the performance of his services hereunder.
4. In the event of any dispute or claim regarding any provision of this
Agreement, or any aspect of ▇▇▇▇▇▇▇▇'▇ independent contractor relationship or
the cessation of that relationship, the parties agree to submit the dispute or
claim to binding arbitration in Orange County, California before an experienced
arbitrator licensed to practice law in California and selected in accordance
with the rules and procedures of the American Arbitration Association as the
exclusive remedy for any such dispute or claim.
5. No provision of this Agreement shall be construed against any party
merely because that party or its/his/her attorney drafted or revised the
provision in question. The provisions of this Agreement are severable, and if
any part of it is found to be unenforceable, the other provisions shall remain
fully valid and enforceable.
6. This Agreement and the Agreement to Transfer and Reissue Detachable
Warrants and Convertible Notes of MGC (the "Transfer Agreement"), by and between
the parties hereto together constitute the sole and entire agreement and
understanding of the parties relating to the subject matter hereof and thereof.
This Agreement, together with the Transfer Agreement, supersede and
automatically cancel any and all prior discussions, negotiations, commitments
and understandings between the parties, whether oral, written, or otherwise,
relating to the subject matter hereof and thereof. This Agreement shall not be
modified, amended, changed or supplemented in any way except by a written
document signed by all parties to this Agreement. This Agreement may be executed
in separate counterparts, each of which shall constitute an original and all of
which, when taken together, shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates written below, opposite their name.
Date: March 30, 1999 /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
CAL WEST SERVICE CORPORATION,
a California corporation
Date: April 2, 1999 By: /s/ M'Liss ▇▇▇▇▇ ▇▇▇▇
------------------------------------
Secretary
MICRO GENERAL CORPORATION,
a Delaware corporation
Date: April 2, 1999 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Chief Executive Officer
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AGREEMENT TO TRANSFER AND REISSUE
DETACHABLE WARRANTS AND CONVERTIBLE NOTES
OF
MICRO GENERAL CORPORATION,
A DELAWARE CORPORATION
(BY AND BETWEEN CALWEST SERVICE CORPORATION,
A CALIFORNIA CORPORATION, MICRO GENERAL CORPORATION, A DELAWARE CORPORATION, AND
▇▇▇▇ ▇▇▇▇▇▇▇▇, AN INDIVIDUAL)
THIS AGREEMENT is made, entered into and is effective as of March 30,
1999 (this "Agreement"), by and between CALWEST SERVICE CORPORATION, A
CALIFORNIA CORPORATION ("CalWest"), and an affiliate of Fidelity National
Financial, Inc., a Delaware corporation and major stockholder of Micro General
Corporation, a Delaware corporation ("MGC"), MGC and ▇▇▇▇ ▇▇▇▇▇▇▇▇, AN
INDIVIDUAL ("▇▇▇▇▇▇▇▇"), and is made with reference to the following facts:
A. Simultaneously with the execution of this Agreement, ▇▇▇▇▇▇▇▇ has
entered into an agreement with respect to ▇▇▇▇▇▇▇▇ providing consulting services
to and for the benefit of MGC (the "Inducement Agreement"), and, in partial
consideration for the services to be rendered by ▇▇▇▇▇▇▇▇ now and in the future
under the terms of such consulting arrangement, CalWest, as lender and
shareholder of MGC, has agreed to convey to MGC those certain rights and
interests as provided hereinbelow with the understanding that as said rights and
interests are to be reissued to ▇▇▇▇▇▇▇▇ pursuant to the Inducement Agreement.
MGC will simultaneously repay CalWest for its conveyance to MGC. In
consideration for such conveyance by CalWest and reissuance by MGC, ▇▇▇▇▇▇▇▇
agrees that he will faithfully perform those obligations as provided under the
terms of his consulting arrangement with MGC.
B. CalWest is currently the holder of certain rights and interests under
Detachable Warrants issued by MGC in favor of CalWest and is further the lender
and the holder of certain rights under Convertible Promissory Notes issued by
MGC. In consideration for the services provided and to be provided by ▇▇▇▇▇▇▇▇
to MGC, CalWest shall, subject to the terms provided herein, transfer back to
MGC and MGC shall reissue to ▇▇▇▇▇▇▇▇ over a period as follows: the first half
(1/2) issued on March 31, 1999 and the second half (1/2) issued on January 1,
2000 or earlier as described in section 2 of the Inducement Agreement granting
to ▇▇▇▇▇▇▇▇ the right to exercise such Warrants and receive upon exercise up to
100,000 shares of MGC common stock at a warrant exercise price of $1.50 per
share of MGC common stock; and, further in two parts over the period described
above, interests in Convertible Promissory Notes issued by MGC granting to
▇▇▇▇▇▇▇▇, as the holder of said Promissory Notes, in a total face indebtedness
of $500,000, the right to convert $300,000 of indebtedness into MGC common stock
at a conversion price of $2.25 per share of MGC common stock, $100,000 of
indebtedness into MGC common stock at a conversion price of $2.00
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per share of MGC common stock, and $100,000 of indebtedness into MGC common
stock at a conversion price of $2.50 per share of MGC common stock. MGC agrees
to repay CalWest over the above described period for the interests which CalWest
is transferring to back to MGC to be reissued to ▇▇▇▇▇▇▇▇.
NOW, THEREFORE, the parties agree as follows:
1. Assignment of Detachable Warrants. CalWest, as the owner and holder
of a Detachable Warrant Certificate dated November 25, 1997, entitling the
holder thereof to acquire up to 50,000 shares of the common stock of MGC at a
warrant exercise price of $1.50 per share, and, as the holder of a Detachable
Warrant Certificate dated April 8, 1998, permitting the holder thereof to
acquire up to 62,500 shares at an exercise price of $1.50 per share, does hereby
agree to convey unto MGC rights under said Warrants to acquire up to 100,000
shares of MGC at an exercise price of $1.50 per share. Said conveyance of said
rights under such 100,000 Warrants shall be effected one half on March 31, 1999
and one half on January 1, 2000 and MGC will reissue Warrants, in the name of
▇▇▇▇▇▇▇▇ representing rights to exercise Warrants for up to 50,000 shares on
March 31, 1999 and up to 50,000 shares on January 1, 2000, subject to such
reissuance of warrants being subject to all terms and conditions of the
Detachable Warrant Certificates issued November 25, 1997 and April 8, 1998.
▇▇▇▇▇▇▇▇ acknowledges that such assignment shall be effective in accordance with
the provisions of Section 2 of the Detachable Warrant Certificates and shall
include the providing of notice under the provisions of Section 2(c) to MGC and
an acknowledgment by ▇▇▇▇▇▇▇▇ that such acquisition of warrants by ▇▇▇▇▇▇▇▇
shall be for his personal investment purposes and shall be held as an investment
by ▇▇▇▇▇▇▇▇ without a view to further transfer or assign any interests so
acquired and may require submission of a written opinion by counsel that such
transfer to ▇▇▇▇▇▇▇▇ shall not be violative of any federal or state securities
act or securities law.
2. Transfer of Interests Under Convertible Promissory Notes. Over the
aforementioned period, CalWest does hereby assign and transfer to MGC interests
under Convertible Promissory Notes held by CalWest issued by CalWest and dated
July 24, 1996, November 25, 1997 and April 8, 1998 representing the transfer of
a portion of the indebtedness held by CalWest under Convertible Promissory Notes
issued by MGC, which interests transferred shall represent a transfer of
$300,000 of MGC indebtedness as represented by such Promissory Notes notes which
shall be subject to conversion to common stock of MGC at a conversion price of
$2.25 per share ($150,000 of MGC indebtedness on March 31, 1999 and $150,000 of
MGC indebtedness on January 1, 2000), a further transfer of $100,000 of such
Promissory Notes convertible to common stock of MGC at a conversion price of
$2.00 per share ($50,000 of such Promissory Notes on March 31, 1999 and $50,000
of MGC promissory notes on January 1, 2000), and an additional $100,000 of
indebtedness under such Promissory Notes of MGC convertible to common stock of
MGC at a conversion price of $2.50 per share ($50,000 of MGC promissory notes on
March 31, 1999 and $50,000 of MGC promissory notes on January 1, 2000). MGC will
reissue convertible promissory notes in said amounts registered in the name of
▇▇▇▇▇▇▇▇ convertible at the prices indicated hereinabove.
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3. Rights Subject to Terms of Warrants and Convertible Notes. ▇▇▇▇▇▇▇▇
does hereby represent to and for the benefit of CalWest, MGC and Dito Caree L.P.
Holding, a Nevada limited partnership ("Caree") (an entity who had participated
in the loan and warrant agreements together with CalWest), that ▇▇▇▇▇▇▇▇ has
read and reviewed all terms and provisions of the loan agreements and agreements
between CalWest and MGC to issue Detachable Warrants, as dated July 24, 1996,
November 25, 1997 and April 8, 1998, and ▇▇▇▇▇▇▇▇ acknowledges that he shall be
bound by all of the terms and conditions thereof as a holder of Detachable
Warrants and Convertible Promissory Notes, including, but not limited to, all
terms and provisions of a Memorandum of Understanding dated November 25, 1997
and April 8, 1998 by and between CalWest and Caree concerning "equalization of
rights" upon the event of any defaults which shall result in enforcement rights
by holders of notes or debentures as against MGC, and ▇▇▇▇▇▇▇▇ does further
agree to be bound by and agree to appoint CalWest as custodian in connection
with the holding and filing of security agreements and UCC Financing Statements
under the terms and provisions of the Convertible Promissory Notes and the
Detachable Warrants, together with rights under the loan agreement pursuant to
which such Promissory Notes and Detachable Warrants were issued. MGC does
further acknowledge that ▇▇▇▇▇▇▇▇ shall be entitled to such benefits as CalWest
had in its capacity as a lender under the General Assignment and Security
Agreements executed and entered into by MGC in favor of CalWest and Caree, and
as further evidenced by UCC-1 filings in favor of CalWest, as an agent for
"lenders," under the terms of the Loan Agreement and Agreements to Issue
Detachable Warrants dated July 24, 1996, November 25, 1997 and April 8, 1998 and
all rights under the aforementioned agreements relating to the Detachable
Warrants and Convertible Promissory Notes, including, without limitation, all
piggyback registration rights.
4. CalWest Service Corporation. CalWest does represent to and for the
benefit of MGC and ▇▇▇▇▇▇▇▇ that:
A. CalWest is the absolute owner of the Detachable Warrants and
Promissory Notes which are being conveyed to MGC and then reissued by MGC to
▇▇▇▇▇▇▇▇ under the terms of this Agreement, free and clear of any liens,
pledges, security interests or other encumbrances of any nature whatsoever.
B. CalWest has both the power and authority to effect the
assignments as contemplated under the terms of this Agreement and does hold all
requisite corporate authorization and authority to make such assignment and
transfer, and effecting such assignments does not require the consent of, or
notice to, any third party.
C. CalWest is not aware of any event, condition or circumstance
which would prevent or prohibit the assignment being made and effected to
▇▇▇▇▇▇▇▇ hereunder. Except as herein expressly provided, CalWest is making no
other representation or warranty concerning the interests to be assigned
hereunder, and the assignments are made without recourse.
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5. Acknowledgment by ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ does hereby acknowledge to and
for the benefit of CalWest, MGC, and Caree that:
▇. ▇▇▇▇▇▇▇▇ has made his own independent evaluation concerning
the interests being acquired and is relying upon no representations, express or
implied, by CalWest or any other party concerning the value of the Convertible
Promissory Notes or Warrants being issued herein and recognizes that such
issuance is without recourse as to CalWest or any other party (excepting the
enforcement of those rights which exist under the terms of the Convertible
Promissory Notes and Detachable Warrants as against MGC) and CalWest's
obligation hereunder.
▇. ▇▇▇▇▇▇▇▇ has made his own independent evaluation of MGC, the
value of MGC and its ability to perform under the terms and provisions of the
Convertible Promissory Notes and Detachable Warrants and is not relying in any
respect upon any representations of CalWest concerning the values of the
interests as issued to ▇▇▇▇▇▇▇▇.
▇. ▇▇▇▇▇▇▇▇ is accepting the interests under the Detachable
Warrants and the Convertible Notes for his own personal purposes and investment
and has no current intention to further assign or transfer such interests nor in
any respect act as an underwriter of any rights or interests acquired under the
Loan Agreement or the Detachable Warrants and acknowledges that the Detachable
Warrants and any right to stock under the terms of the Convertible Notes
represents interests being acquired in securities which are not registered under
the Securities Act of 1933, as amended, nor under any applicable state
securities laws, and, therefore, any rights to subsequently assign, transfer or
pledge any interests in securities acquired under the terms of this Agreement
shall require compliance with applicable federal and state securities laws and
further transfer or assignment of any interests acquired may, if necessary,
require receipt by MGC of an opinion of counsel reasonably satisfactory to MGC
that registration is not required and/or that such transfer is in conformity
with applicable federal and state securities laws or an exemption thereunder.
▇. ▇▇▇▇▇▇▇▇ acknowledges that he shall be entitled to receipt of
all rights under the terms of the Loan Agreement and debentures as it relates to
the interests acquired, including, without limitation, piggyback registration
rights and security interests, and acknowledges that any such rights shall be
subject to his performance of the terms and provisions of the Loan Agreement as
an assignee and successor to CalWest.
6. Acknowledgment of Cooperation. CalWest and ▇▇▇▇▇▇▇▇ agree that they
shall, from and after the date of this Agreement, reasonably cooperate doing any
and all acts necessary or convenient to effect a conveyance and issuance of the
interests under the Detachable Warrants and convertible promissory notes from
CalWest to MGC and from MGC to ▇▇▇▇▇▇▇▇, including, without limitation,
providing appropriate notices and transfer and issuance documents to ▇▇▇▇▇▇▇▇.
7. Notices. Any notices or other communications required or permitted
hereunder shall be in writing, and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested,
overnight courier (with all costs prepaid) or by facsimile, addressed
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to the parties as set forth herein. Any such notice shall be deemed received
upon the earlier of (a) if personally delivered, the date of delivery to the
address of the person to receive such notice, (b) if mailed, four (4) business
days after the date of posting by the United States post office, (c) if given by
overnight courier, upon receipt by the person to receive such notice, or (d) if
sent by facsimile, when sent.
To ▇▇▇▇▇▇▇▇: ___________________________
___________________________
___________________________
Attn:______________________
Facsimile:_________________
To CalWest: CalWest Service Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To MGC: ___________________________
___________________________
___________________________
Attn:______________________
Facsimile:_________________
Any notice, request, demand, direction or other communication sent by facsimile
must be confirmed within forty-eight (48) hours by letter mailed or delivered in
accordance with the foregoing. Notice of change of address shall be given by
written notice in the manner detailed in this Section 7. Rejection or other
refusal to accept or the inability to deliver because of a changed address of
which no notice was given shall be deemed to constitute receipt of the notice,
demand, request or communication sent.
8. Miscellaneous.
A. Rights under the terms of this Agreement given to ▇▇▇▇▇▇▇▇ as
an individual, subject to transfer in compliance with applicable securities
laws, shall not be subject to assignment or transfer without the written consent
of CalWest having first been had and obtained. This Agreement shall inure to the
benefit of and be binding upon the heirs, estate and personal representatives of
▇▇▇▇▇▇▇▇. Any attempt at assignment without compliance of this provision shall
be null and void and of no force or effect.
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B. The provisions of this Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of California.
MICRO GENERAL CORPORATION, CALWEST SERVICE CORPORATION,
A DELAWARE CORPORATION CALIFORNIA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ M'Liss ▇▇▇▇▇ ▇▇▇▇
------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: M'Liss ▇▇▇▇▇ ▇▇▇▇
Title:Chief Executive Officer Title: Secretary
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, AN INDIVIDUAL
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