Exhibit 99.4
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (hereinafter, this "Agreement") is made this 18th
day of February, 2003, by and among DRAWBRIDGE INVESTMENT PARTNERS LLC, a
Delaware limited liability company ("Drawbridge"), ALTERNATE MARKETING
NETWORKS, INC., a Delaware corporation ("ALTM"), K2 VC LTD., a Texas limited
partnership ("K2VC"), HENCIE, INC., a Delaware corporation ("Hencie"), HENCIE
CONSULTING SERVICES, INC., a Texas corporation ("Hencie Consulting"; together
with Hencie, the "Hencie Parties" and each a "Hencie Party"), ▇▇▇▇ ▇▇▇▇
("Khan"), and the directors and certain stockholders of ALTM from time to
time a party hereto.
RECITALS
A. Pursuant to the Settlement Agreement, an Agreed Judgment dated
May 31, 2002, was entered against Khan and the Hencie Parties, jointly and
severally, in favor of Edge in the amount of $1,650,000 plus interest at 18%
per annum (the "Agreed Judgment");
B. To secure the obligations under the Agreed Judgment, Khan and
K2VC granted a first priority security interest in 2,474,039 shares of common
stock, par value $.01 per share, of ALTM (the "ALTM Stock"), pursuant to a
Pledge Agreement dated August 19, 2002, in favor of Edge (the "Pledge
Agreement", together with the Agreed Judgment, the Settlement Agreement and
the other documents and certificates executed or delivered in connection
therewith, the "Judgment Documents");
C. Pursuant to that certain Sale Agreement dated as of September 20,
2002, by and between Edge and Drawbridge (the "Sale Agreement"), Drawbridge
purchased all of the obligations and liabilities of Khan and the Hencie
Parties to Edge under the Agreed Judgment and the other Judgment Documents
and Edge assigned all of its right, title and interest in and to the Agreed
Judgment and the other Judgment Documents to Drawbridge;
D. On the date this document is executed, Khan and the Hencie
Parties are in default of certain obligations to Drawbridge under the
Settlement Agreement, and Khan and the Hencie Parties have requested
Drawbridge to restructure the obligations of Khan and the Hencie Parties to
Drawbridge; and
E. Drawbridge has agreed to do so, upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
Definitions
1.01 Capitalized terms used but not defined in this Agreement shall
have the meanings assigned to them in that certain Settlement Agreement and
Release, dated as of May 22, 2002, by and among Drawbridge, as assignee of
Edge Technology Group, Inc., a Delaware corporation ("Edge"), and Khan and
the Hencie Parties evidencing the settlement of that certain lawsuit styled
Edge Technology Group, Inc. v. Hencie, Inc., Hencie Consulting Services, Inc.
and ▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇, Case No. ▇▇-▇▇▇▇▇-▇, in the ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (as amended, supplemented or
otherwise modified from time to time, including, without limitation, as
modified by the Waiver and Forbearance Agreement dated August 19, 2002, such
modification having no further consequence or effect, the "Settlement
Agreement").
1.02 The following terms used in this Agreement shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, from time to
time, and any successor statute or law thereto.
"Affiliate" means a Person: (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, a Person; (ii) which beneficially owns or
holds 5% or more of any class of the Voting Securities of a Person; or
(iii) 5% or more of the Voting Securities (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which
is beneficially owned or held by a Person or a Subsidiary (as defined
in the Act) of a Person. For the purpose of this definition, "control"
of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management policies,
whether through the ownership of Voting Securities, by contract or
otherwise.
"Business Day" means any day which is not a Saturday, Sunday or
day on which banks are not required to be open in the State of Texas.
"Confidential Information" shall mean any written, documentary or
oral information of any kind disclosed by ALTM to Drawbridge as a
result of Drawbridge's exercise of its board of director's observation
rights pursuant to Section 5.02(a) of this Agreement. The term
"Confidential Information" does not include information that (a) is
publicly available prior to the date of this Agreement, (b) becomes
publicly available after the date of this Agreement through no wrongful
act of the receiving party, (c) is rightfully known by the receiving
party without any proprietary restrictions at the time of receipt of
such information from the disclosing party or becomes rightfully known
to the receiving party without proprietary restrictions from any
source(s) other than ALTM without proprietary restriction on the right
of such source(s) to use or disclose, or (d) is independently developed
by the receiving party by persons who did not have access, directly or
indirectly, to any Confidential Information.
"Drawbridge Payments" means any and all cash flows, both positive
and negative, (i) in connection with the sale of the Drawbridge Shares,
(ii) in connection with the Settlement Agreement after September 20,
2002 and on or prior to the date of this Agreement and (iii) in
connection with costs and expenses that have been or may hereafter be
incurred by Drawbridge in connection with the preparation, negotiation
and execution of this Agreement, the Sale Agreement and the Judgment
Documents and any and all amendments, modifications, and supplements
thereto, including, without limitation, the costs and fees of
Drawbridge's legal counsel, and all costs and expenses incurred by
Drawbridge in connection with the enforcement or preservation of any
rights under the Settlement Agreement or any other Judgment Documents,
including, without limitation, the costs and fees of Drawbridge's legal
counsel, and all costs and expenses incurred by Drawbridge in
connection with the acquisition, holding or disposition of the
Drawbridge Shares pursuant to Federal or State securities laws or
otherwise, including without limitation, the costs and fees of
Drawbridge's legal counsel.
"Equity Interest" means (i) with respect to a corporation, any
and all capital stock or warrants, options or other rights to acquire
capital stock and (ii) with respect to a partnership, limited liability
company or similar Person, any and all units, interests, rights to
purchase, warrants, options or other equivalents of, or other ownership
interests in any such Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, from time to time, and any successor statute or law thereto.
"Family Member" means any relative or spouse of such person, or
any relative of such spouse, any one of whom has the same home as such
person.
"Independent Financial Expert" shall mean a regional or national
investment banking firm selected by ALTM and reasonably acceptable to
Drawbridge.
"IRR" means the discount rate at which the present value of the
Drawbridge Payments equals the Purchase Price. Thus, IRR with respect
to Purchase Price is the discount rate at which the present value of
such Drawbridge Payments equals the Purchase Price or, in other words,
the discount rate that makes the net present value zero. The IRR shall
be calculated using the Microsoft Excel function, XIRR, as written XIRR
(values, dates, .01).
"Market Price" means for any ALTM Stock on each Business Day
means: (i) if such ALTM Stock is listed or admitted to trading on any
securities exchange or quotation system, the closing price, regular
way, on such day on the principal securities exchange or quotation
system on which such ALTM Stock is traded, or if no sale takes place on
such day, the average of the closing bid and asked prices on such day
or (ii) if such ALTM Stock is not then listed or admitted to trading on
any securities exchange or quotation system, the last reported sale
price on such day, or if there is no such last reported sale price on
such day, the average of the closing bid and the asked prices on such
day, as reported by a reputable quotation source designated by ALTM. If
there are no such prices on a Business Day, then the market price shall
not be determinable for such Business Day.
"Market Value" means, at any date of determination, an amount per
share of ALTM Stock shall be equal to the greater of (i) $0.50 per
share or (ii) (A) if the ALTM Stock is not registered under the
Exchange Act, the value of the ALTM Stock as mutually agreed by
Drawbridge and ALTM; provided, however, that if Drawbridge and ALTM are
unable to mutually agree upon such value, ALTM shall select an
Independent Financial Expert who shall determine the value of such ALTM
Stock or (B) if the ALTM Stock is registered under the Exchange Act,
the average of the daily Market Prices for each Business Day during the
period commencing 30 Business Days before such date and ending on the
date one day prior to such date or, if the ALTM Stock has been
registered under the Exchange Act for less than 30 consecutive Business
Days before such date, then the average of the daily Market Prices for
all of the Business Days before such date for which daily market prices
are available. If the market price is not determinable for at least 15
Business Days in such period, the Market Value of the ALTM Stock shall
be determined as if the ALTM Stock was not registered under the
Exchange Act.
"Person" means an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Purchase Price" means $802,500.
"Remaining Shares" means the Drawbridge Shares held by Drawbridge
on the Target Value Date after giving effect to the sale of any
Drawbridge Shares necessary to result in the receipt by Drawbridge of
the Target Value on such date.
"SEC" means the Securities and Exchange Commission.
"Target Value" means an amount sufficient to result in the
receipt by Drawbridge of the Purchase Price plus an IRR of 40% on the
Purchase Price.
"Target Value Date" means the date upon which Drawbridge receives
a Drawbridge Payment that together with all other Drawbridge Payments
received or paid prior to such date results in Drawbridge receiving the
Target Value.
"Voting Securities" means any class of Equity Interests of a
Person pursuant to which the holders thereof have, at the time of
determination, the general voting power under ordinary circumstances to
vote for the election of directors, managers, trustees or general
partners of such Person (irrespective of whether or not at the time any
other class or classes will have or might have voting power by reason
of the happening of any contingency).
ARTICLE II
Effective Date
2.01 Effectiveness of Agreement. This Agreement shall be effective on
the date that all conditions precedent in Section 6.01 hereof have occurred
and/or are satisfied, in each case to the satisfaction of Drawbridge in its
reasonable discretion.
ARTICLE III
Existing Default
3.01 Existing Default. Pursuant to Subsection 2.2 of the Settlement
Agreement, Khan and the Hencie Parties are required to pay monthly
installments to Drawbridge. As of the date of execution of this Agreement,
Khan and the Hencie Parties hereby acknowledge, confirm and agree that each
of Khan and the Hencie Parties has failed to pay the monthly installments due
on December 6, 2002, January 6, 2003 and February 6, 2003, as required by
Subsection 2.2 of the Settlement Agreement, and such failure presently
constitutes an Event of Default and entitles Drawbridge to exercise rights
and remedies under the Settlement Agreement and the other Judgment Documents.
ARTICLE IV
Release
4.01 Release. In reliance upon the representations, warranties and
covenants of ALTM, K2VC, Khan, and the Hencie Parties contained in this
Agreement and subject to the terms and conditions of this Agreement
(including the receipt by Drawbridge of the Drawbridge Shares and the Initial
Cash Payment) and any document or instrument executed in connection herewith,
Drawbridge does hereby unconditionally and irrevocably release and forever
discharge ALTM, K2VC, Khan, and each of the Hencie Parties and any and all of
the predecessors, successors, assigns, and current and former employees,
trustees, partners, officers, directors, stockholders, employees, agents,
attorneys, accountants, representatives, parent corporations, subsidiaries,
affiliates, and beneficiaries of ALTM, K2VC, Khan, and each of the Hencie
Parties (including, without limitation, any heirs, assigns, trustees, or
executors of any of the foregoing) (collectively the "Hencie Releasees") from
any and all claims, counterclaims, set-offs, demands, remedies, suits,
proceedings, causes of action, orders, obligations, contracts, agreements,
debts, damages, losses, costs, fees, and expenses (including, without
limitation, any and all legal and attorneys' costs, fees, and expenses), and
liabilities of any kind, character, or nature whatsoever, at common law,
statutory, or otherwise, whether known or unknown, whether fixed, contingent,
or matured, whether suspected or unsuspected, currently existing or arising
as of the date of this Agreement (each, a "Claim," and, collectively, the
"Claims") which relate in any way to, or that Drawbridge may have had, now
have, or ever claim to have, either directly, indirectly, or derivately
against any or all of the Hencie Releasees in connection with or arising
under, the Judgment Documents (the "Release"); provided, however, that the
Release does not apply to the breach by any of the Hencie Releasees of any of
the terms of this Agreement. In connection with the Release, Drawbridge
agrees to file, execute, and deliver any and all documents, instruments, and
other agreements, and to do all things necessary or helpful and as reasonably
requested by any of the Hencie Releasees to evidence the Release and to carry
out the purposes of the Release, including, without limitation, by
terminating, discharging, releasing, and delivering the Agreed Judgment to
the Hencie Parties, by filing terminations of any financing statements, and
by filing, executing, and delivering any and all other partial releases,
waivers, discharges, and/or terminations, as reasonably required.
ARTICLE V
Other Agreements
5.01 Issuance of ALTM Stock. In exchange and as consideration for the
Release, ALTM, K2VC, Khan, the Hencie Parties, and Drawbridge agree that on
the date hereof, (i) ALTM shall cause 1,474,039 shares of ALTM Stock to be
issued to Drawbridge (the "1.4M ALTM Shares"), (ii) Drawbridge will release
its security interest in the 1,474,039 shares of ALTM Stock issued to K2VC
and pledged to Drawbridge, as assignee of Edge, pursuant to the Pledge
Agreement and transferred by K2VC to ALTM (the "Transferred Shares") and the
remaining 1,000,000 shares of ALTM Stock issued to K2VC and pledged to
Drawbridge, as assignee of Edge, pursuant to the Pledge Agreement and ALTM
shall issue a replacement certificate to K2VC evidencing such remaining
1,000,000 shares (the "K2VC Shares"), and (iii) ALTM shall cause the 1.4M
ALTM Shares and an additional 1,000,000 shares of ALTM Stock to be issued to
Drawbridge (the "1M Drawbridge Shares", together with the 1.4M ALTM Shares,
the "Drawbridge Shares") and ALTM shall issue a certificate to Drawbridge
evidencing such Drawbridge Shares.
5.02 ALTM Stock. ALTM, K2VC, Khan, the Hencie Parties, and Drawbridge
agree as follows:
(a) Until Drawbridge shall have received the Target Value or
shall own less than five percent (5%) of the shares of outstanding ALTM
Stock, Drawbridge shall have the right, but not the obligation, to have
one representative present (whether in person or by telephone) at all
meetings of the board of directors of ALTM. ALTM shall send to such
representative, upon the request of Drawbridge, all of the notices,
information and other materials that are distributed to the directors
of ALTM. Drawbridge shall provide notice to ALTM of the identity and
address of, or any change with respect to the identity or address of,
such representative. The Hencie Parties shall reimburse such
representative for the reasonable out-of-pocket expenses of such
representative incurred in connection with the attendance of such
meetings.
(b) Until Drawbridge shall have received the Target Value or
sold all of the Drawbridge Shares, ALTM agrees to use reasonable best
efforts to identify potential purchasers of blocks of the Drawbridge
Shares at a price per share not less than 85% of Market Price and on
terms and conditions acceptable to Drawbridge in its sole and absolute
discretion and to introduce such potential purchasers to Drawbridge;
provided, however, that nothing in this Agreement shall require ALTM to
take any action(s) that (i) would require ALTM to register as a broker-
dealer (as such term is used in the Exchange Act) or obtain any
license(s) to act as a broker-dealer under any federal or state
securities law(s), rule(s), or regulation(s) or (ii) would otherwise
subject ALTM to any federal or state law(s), rule(s), or regulation(s)
applicable to broker-dealers (or similar term(s) having substantially
the same meaning as the term broker-dealer and/or describing Person(s)
functioning or acting in a capacity similar to a broker-dealer).
(c) Until Drawbridge shall have received the Target Value or
sold all of the Drawbridge Shares, Drawbridge shall have the right to
exercise or refrain from exercising any and all voting rights incident
to the Drawbridge Shares owned by Drawbridge at any such time.
(d) Until Drawbridge shall have received the Target Value or
sold all of the Drawbridge Shares, on each of February 18, 2004,
February 18, 2005 and February 18, 2006, Drawbridge shall be obligated
to sell and ALTM shall be obligated to purchase a number of the
Drawbridge Shares, so that the product of the number of Drawbridge
Shares to be purchased and sold multiplied by the Market Value of such
Drawbridge Shares equals $100,000; provided that if on the required
date of purchase the number of Drawbridge Shares to be purchased and
sold pursuant to this Section 5.02(d) is greater than the number of
Drawbridge Shares then held by Drawbridge, then Drawbridge shall only
be obligated to sell and ALTM shall only be obligated to purchase the
number of Drawbridge Shares then held by Drawbridge. Drawbridge shall
surrender the Drawbridge Shares to be purchased by ALTM to ALTM against
payment by ALTM by wire transfer to the account set forth on the
signature pages attached hereto. If less than all of the Drawbridge
Shares are being repurchased by ALTM, ALTM shall cancel the Drawbridge
Shares and issue in the name of, and deliver to, Drawbridge a
replacement stock certificate for the portion of Drawbridge Shares not
being repurchased. ALTM, by prior written notice to Drawbridge, may
designate one or more persons or entities to purchase the shares ALTM
is required to purchase under this clause (d) of Section 5.02, however,
such designation shall not release, amend, modify, compromise, alter or
terminate the duty and obligation of ALTM to purchase such shares or
its liability for failure to comply with this clause (d) of Section
5.02.
(e) Until Drawbridge shall have received the Target Value or
sold all of the Drawbridge Shares, none of K2VC, Khan, nor any existing
or hereafter appointed or elected member of the board of directors nor
any Family Member or Affiliate of an appointed or elected member of the
board of directors of ALTM or any of its Subsidiaries (as defined in
the Act) (other than Middlewest Ventures II, LP) (the "Restricted
Stockholders") shall sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law) any interest in
any shares of ALTM Stock now or hereafter acquired by such Restricted
Stockholder ("Restricted Shares"); provided that K2VC shall be entitled
to transfer some or all of its shares of ALTM Stock to settle any
existing litigation indemnified by K2VC and/or Khan. ALTM shall cause
each current member of the board of directors of ALTM to execute the
joinder agreement in the form attached hereto as Exhibit A within
thirty (30) days of the date of this Agreement. Promptly upon the
election or appointment of any person to serve as a director of ALTM
that is not a party to this Agreement, ALTM shall cause such person to
become a party to this Agreement by executing and delivering to
Drawbridge a joinder agreement in the form attached hereto as Exhibit A
within thirty (30) days after such election or appointment. Unless
specifically released in writing by Drawbridge, any person who becomes
a Restricted Stockholder shall remain a Restricted Stockholder and all
Restricted Shares shall remain Restricted Shares for all purposes of
this Agreement; provided, however, that if any such Restricted
Stockholder, for any reason, ceases to be a director of ALTM or any of
its Subsidiaries, then on the date that is 180 days after the date such
Restricted Stockholder ceases to be a director, such Restricted
Stockholder, and any and all Family Members and Affiliates of such
Restricted Stockholder, shall no longer be deemed to be a Restricted
Stockholder, for purposes of this Section 5.02(e), or subject to the
restrictions of this Section 5.02(e).
(f) Until Drawbridge shall have received the Target Value or
sold all of the Drawbridge Shares, ALTM shall not issue any additional
ALTM Stock or any options, warrants or other securities convertible
into or exchangeable or exercisable for ALTM Stock without the prior
written consent of Drawbridge, which consent shall not be unreasonably
withheld; provided that this Section 5.02(f) shall not apply to (i) the
issuance of the Drawbridge Shares, (ii) shares of ALTM Stock issued by
ALTM to Khan pursuant to the stock option agreement, dated as of the
date hereof, as in effect on the date hereof, attached hereto as
Exhibit B, (iii) shares of ALTM Stock issued to directors or employees
of ALTM pursuant to the 1995 Long-Term Incentive and Stock Option Plan
as in effect on the date hereof or the Outside Directors and Advisors
Stock Option Plan as in effect on the date hereof, and (iv) shares of
ALTM Stock issued for cash consideration per share equal to or greater
than Market Value; provided that additional shares of ALTM Stock shall
be issued to Drawbridge in connection with any issuance of ALTM Stock
pursuant to this clause (iv), so that upon receipt of such additional
shares Drawbridge shall own the same percentage of outstanding shares
of ALTM Stock as it did immediately prior to such issuance.
5.03 Employment and Noncompete Agreements. On or prior to the date
hereof, ALTM, K2VC, Khan, and the Hencie Parties agree to deliver to
Drawbridge copies of any and all employment agreements and non-compete
agreements by and among ALTM, K2VC, or the Hencie Parties with Khan. Such
employment agreements and non-compete agreements shall not be amended,
supplemented, modified or waived prior to the Target Value Date without the
prior written consent of Drawbridge, which consent shall not be unreasonably
withheld.
5.04 Repurchase of Drawbridge Shares. In the event the Target Value
Date occurs during any of the periods set forth below, ALTM, or its designee,
may, by written notice to Drawbridge, purchase the percentage of the
Remaining Shares set forth opposite such period for an aggregate purchase
price of ten dollars ($10.00):
Period Percentage
February 18, 2003 through February 18, 2004 100%
February 19, 2004 through March 18, 2004 95%
March 19, 2004 through April 18, 2004 90%
April 19, 2004 through May 18, 2004 85%
May 19, 2004 through June 18, 2004 80%
June 19, 2004 through July 18, 2004 75%
July 19, 2004 through August 18, 2004 70%
August 19, 2004 through September 18, 2004 65%
September 19, 2004 through October 18, 2004 60%
October 19, 2004 through November 18, 2004 55%
November 19, 2004 through December 18, 2004 50%
December 19, 2004 through January 18, 2005 45%
January 19, 2005 through February 18, 2005 40%
Neither ALTM, nor any of its designees shall have any right to purchase any
of the Remaining Shares: (i) if the Target Value Date occurs after
February 18, 2005, or (ii) if the Target Value Date occurs before
February 18, 2005, and any of the following: (a) the Registration Statement
has not been declared effective pursuant to Section 6.02(a) of this Agreement
on or before August 18, 2003, and remained effective through such date,
(b) Drawbridge shall not be able to sell all or a portion of the Drawbridge
Shares for a period of more than thirty (30) consecutive days or an aggregate
of sixty (60) days in any twelve (12) month period as a result of the failure
of ALTM to amend the Registration Statement as contemplated by
Section 6.02(2) of this Agreement, or (c) ALTM shall have failed to purchase
all or a portion of the Drawbridge Shares required to be purchased by ALTM
pursuant to Section 5.02(d) of this Agreement. To be effective for any
period prior to February 18, 2005, written notice of the election to purchase
the Remaining Shares that ALTM, or its designees, are permitted to purchase
together with a check payable to Drawbridge for the ten dollar ($10.00)
purchase price for such Remaining Shares must be received prior to the last
day of such period.
5.05 Confidentiality. Drawbridge shall protect all of the
Confidential Information of ALTM as confidential and proprietary information
and, except with the prior express written consent of ALTM or as otherwise
specifically provided herein, shall not disclose, copy, or distribute such
Confidential Information to any other Person (other than on a need-to-know
basis to the officers, directors, consultants, advisors, partners, senior
management and Affiliates of Drawbridge after Drawbridge has informed such
Person(s) of the confidential and proprietary nature of such Confidential
Information and of the obligations of such Person(s) with respect to the
protection of such Confidential Information in accordance with the terms of
this Agreement), or cause or permit any other Person to disclose, copy, or
distribute such Confidential Information; provided that Drawbridge shall be
permitted to disclose, copy or distribute such Confidential Information in
the event that Drawbridge is required by law or regulation or requested by
any governmental agency or other regulatory authority (including any self-
regulatory organization having or claiming to have jurisdiction) or in
connection with any legal proceedings.
ARTICLE VI
Conditions Precedent; Registration Statement
6.01 Condition to Effectiveness. Notwithstanding anything herein to
the contrary, the effectiveness of this Agreement is subject to the
satisfaction of the following conditions precedent and all such conditions
precedents must be satisfied on or before February 18, 2003, unless
specifically waived in writing by Drawbridge:
(a) Drawbridge shall have received this Agreement, duly
executed by ALTM, K2VC, Khan, and each of the Hencie Parties.
(b) The Hencie Parties shall have paid to Drawbridge an initial
cash payment of $120,000 (the "Initial Cash Payment") by wire transfer
to the account set forth on the signature pages attached hereto.
(c) Drawbridge shall have received the certificates evidencing
the Drawbridge Shares as required by Section 5.01 hereof.
6.02 Registration Statement. ALTM shall prepare and file, on or
before April 18, 2003, a registration statement on Form SB-2 (or any other
appropriate form) (the "Registration Statement") and any related
qualification or compliance with respect to all of the Drawbridge Shares so
as to permit or facilitate the sale and distribution of the Drawbridge
Shares. Subject to the foregoing, ALTM shall effect such registration,
qualification, or compliance (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky (except that in no event shall ALTM be required to
qualify to do business as a foreign corporation in any jurisdiction where it
would not, but for the requirements of this clause, be required to be so
qualified, to subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction) or other
state securities laws and appropriate compliance with applicable regulations
issued under the Exchange Act and any other governmental requirements or
regulations) covering the Drawbridge Shares as soon as practicable in
accordance with the terms hereof. ALTM further agrees to:
(1) use all commercially reasonable efforts to
cause the Registration Statement to become effective, and,
subject to the provisions below, use commercially
reasonable efforts to keep the Registration Statement
effective until the earlier of (A) the date on which all of
the Drawbridge Shares may be sold without registration in a
single transaction pursuant to Rule 144(k) of the Act, or
(B) the date on which all of the Drawbridge Shares have
been sold; provided, however, that it shall be a condition
precedent to the obligations of ALTM under this
Section 6.02 that Drawbridge shall furnish to ALTM such
information regarding Drawbridge, the Drawbridge Shares,
and the intended method of disposition of the Drawbridge
Shares as shall be required to effect and maintain the
effectiveness of the registration of any such Drawbridge
Shares.
(2) If at any time after the Registration Statement
becomes effective, ALTM advises Drawbridge in writing that
the Registration Statement shall contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, or any prospectus
comprising a part of the Registration Statement shall
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or
the occurrence or existence of any material pending
corporate development, ALTM shall give notice to Drawbridge
with respect thereto and use its commercially reasonable
efforts to file an amendment to the Registration Statement
to provide such disclosure as may be necessary so that the
Registration Statement or prospectus comprising a part of
the Registration Statement, as amended, shall not contain
any untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(3) Prepare and file with the SEC such amendments
and supplements to the Registration Statement and the
prospectus used in connection with the Registration
Statement as may be necessary to comply with the provisions
of the Act with respect to the disposition of all
securities covered by the Registration Statement.
(4) Furnish to Drawbridge such numbers of copies of
a prospectus in conformity with the requirements of the
Act, and such other documents as they may reasonably
request in order to facilitate the disposition of the
Drawbridge Shares.
(5) Use commercially reasonable efforts to register
and qualify the securities covered by the Registration
Statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by
Drawbridge.
6.03 Liquidated Damages. In the event ALTM breaches any of the
covenants and agreements set forth in Section 6.02 hereof other than as a
result of the action or inaction of Drawbridge in providing information to
ALTM as required by Section 6.02(1), Drawbridge shall be entitled to the sum
of $1,000 per day as liquidated damages for each day such breach exists.
Upon the receipt by Drawbridge of the liquidated damages then due and owing,
Drawbridge shall deliver a number of Drawbridge Shares to ALTM, so that the
product of the number of Drawbridge Shares so delivered multiplied by the
Market Value of such Drawbridge Shares equals the aggregate amount of
liquidated damages paid by ALTM and received by Drawbridge pursuant to the
preceding sentence.
ARTICLE VII
Representations and Warranties
7.01 Representations and Warranties of ALTM, K2VC, Khan, and the
Hencie Parties. Each of ALTM, K2VC, Khan, and the Hencie Parties hereby
represent and warrant to Drawbridge (a) the execution, delivery and
performance of this Agreement and any and all other documents executed and/or
delivered in connection herewith has been authorized by all requisite
corporate or partnership action on the part of ALTM, K2VC, Khan, and the
Hencie Parties and will not violate the Articles of Incorporation or Bylaws,
or similar organizational documents, of ALTM, K2VC, Khan, or the Hencie
Parties; (b) neither ALTM, K2VC, Khan, nor any Hencie Party has amended its
Articles of Incorporation or Bylaws, or similar organizational documents,
since the date of the Settlement Agreement; (c) the Drawbridge Shares have
been duly authorized and validly issued and are fully paid, non-assessable
and are issued free and clear of all liens, encumbrances and restrictive
agreements (other than any liens, encumbrances and restrictive agreements
contemplated by this Agreement); (d) ALTM, K2VC, Khan, and each Hencie Party,
at Drawbridge's request, shall promptly execute or cause to be executed and
shall deliver to Drawbridge any and all documents, instruments and agreements
necessary to give effect to or carry out the terms or intent of this
Agreement, and (e) since November 18, 2002, no appointed or elected member of
the board of directors of ALTM or any of its Subsidiaries has sold,
transferred, assigned, pledged, or otherwise disposed of (whether with or
without consideration and whether voluntarily or involuntarily or by
operation of law) any interest in any shares of ALTM Stock to any of its
Family Members or Affiliates.
7.02 Representations and Warranties of Drawbridge. Drawbridge hereby
represents and warrants to ALTM, K2VC, Khan, and the Hencie Parties as
follows:
(a) Drawbridge is an "accredited investor" as defined in
Rule 501(a) of Regulation D promulgated under the Act.
(b) Drawbridge understands that in the event it should resell
the Drawbridge Shares, or any part thereof, within the foreseeable
future, it may be deemed to be an underwriter, as that term is defined
in the Act, and further understands and agrees that the Drawbridge
Shares cannot be transferred, sold, offered for sale, pledged, or
hypothecated in the absence of a registration statement in effect with
respect to the Drawbridge Shares under the Act and in compliance with
any applicable state securities law or unless sold pursuant to Rule 144
of the Act or any other exemption from registration available under the
Act.
(c) Drawbridge (i) is aware that the United States securities
laws prohibit any person who has material, nonpublic information about
a public company from purchasing or selling securities of that company,
or from communicating that information to any other person under
circumstances where it is reasonably foreseeable that such person is
likely to purchase or sell those securities and (ii) is familiar with
the Exchange Act and the rules and regulations promulgated thereunder,
and understands that Drawbridge may not use, nor cause or allow any
third party to use, any Confidential Information in contravention of
the Exchange Act or any such rules and regulations, including without
limitation Rules 10b-5 and 14e-3 under the Exchange Act.
(d) Any sale or exchange offer of any of the Drawbridge Shares
will not be made in any manner that will violate the Act or any
applicable blue sky law.
ARTICLE VIII
Miscellaneous Provisions
8.01 Survival of Representations and Warranties. All representations
and warranties made in this Agreement, shall survive the execution and
delivery of this Agreement, and no investigation by Drawbridge or any closing
shall affect the representations and warranties or the right of Drawbridge to
rely upon them.
8.02 Expenses. If a legal action is brought by any party to this
Agreement to enforce the terms and conditions of this Agreement, it is
expressly agreed that the party in whose favor a final judgment is entered
shall entitled, in addition to any other relief that may be awarded, to
recover from the other party or parties its reasonable attorneys' fees,
together with such prevailing party's other reasonable and necessary costs
and expenses incurred in connection with such litigation.
8.03 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
8.04 Successors and Assigns; No Third Party Beneficiaries. This
Agreement is binding upon and shall inure to the benefit of Drawbridge, ALTM,
K2VC, Khan, and each of the Hencie Parties and their respective successors
and assigns; provided that ALTM, K2VC, Khan, and the Hencie Parties may not
assign or transfer any of their respective rights or obligations hereunder
without the prior written consent of Drawbridge. Except as expressly
provided in the preceding sentence, neither this Agreement nor any of the
provisions hereof shall inure to the benefit of any Person other than the
parties hereto.
8.05 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.
8.06 Effect of Waiver. No consent or waiver, express or implied, by
Drawbridge to or for any breach of or deviation from any covenant or
condition by ALTM, K2VC, Khan, or any of the Hencie Parties shall be deemed a
consent to or waiver of any other breach of the same or any other covenant,
condition or duty.
8.07 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
8.08 Applicable Law. THIS AGREEMENT AND ALL OTHER DOCUMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, AND THE PARTIES HEREBY CONSENT TO JURISDICTION IN THE FEDERAL
OR STATE COURTS SITUATED IN DALLAS COUNTY, TEXAS.
8.09 Entire Agreement. THIS AGREEMENT AND THE DOCUMENTS AND
INSTRUMENTS REFERENCED HEREIN AND DELIVERED PURSUANT TO AND IN ACCORDANCE
WITH THIS AGREEMENT SET FORTH THE ENTIRE AGREEMENT AND UNDERSTANDING OF THE
PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, AND SUPERSEDE AND REPLACE ALL OTHER PRIOR AGREEMENTS,
ARRANGEMENTS, AND UNDERSTANDINGS RELATED TO THE SUBJECT MATTER HEREOF,
INCLUDING, WITHOUT LIMITATION, THE JUDGMENT DOCUMENTS. THIS AGREEMENT
SUPERSEDES AND REPLACES IN ITS ENTIRETY, AND RELEASES THE HENCIE RELEASEES
FROM ANY CLAIMS RELATED TO, THE JUDGMENT DOCUMENTS. NO UNDERSTANDING,
PROMISE, INDUCEMENT, STATEMENT OF INTENTION, REPRESENTATION, WARRANTY,
COVENANT OR CONDITION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, WHETHER BY
STATUTE OR OTHERWISE, HAS BEEN MADE BY ANY PARTY HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF WHICH IS NOT EMBODIED IN THIS AGREEMENT OR IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND NO PARTY HERETO
SHALL BE BOUND BY OR LIABLE FOR ANY ALLEGED UNDERSTANDING, PROMISE,
INDUCEMENT, STATEMENT, REPRESENTATION, WARRANTY, COVENANT OR CONDITION NOT SO
SET FORTH WITH RESPECT TO THE SUBJECT MATTER HEREOF. NO MODIFICATION,
RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS AGREEMENT
SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY DRAWBRIDGE, ALTM,
K2VC, KHAN, AND THE HENCIE PARTIES.
8.10 Release. ALTM, K2VC, KHAN, AND EACH HENCIE PARTY HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES DRAWBRIDGE, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT
IS EXECUTED, WHICH ALTM, K2VC, KHAN, OR ANY HENCIE PARTY MAY NOW OR HEREAFTER
HAVE AGAINST DRAWBRIDGE, ITS RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE,
AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING
FOR, CHARGING, TAKING, RESERVING, AND COLLECTING OR RECEIVING INTEREST IN
EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE; PROVIDED, HOWEVER, THAT,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE RELEASE IN SECTION 4.01 OF THIS
AGREEMENT, NOR THE RELEASE GRANTED IN THIS SECTION 8.10 SHALL IMPAIR OR
DIMINISH ANY OF THE RIGHTS OR OBLIGATIONS OF ANY OF THE PARTIES PURSUANT TO,
NOR SHALL ANYTHING HEREIN OPERATE AS A RELEASE OF ANY CLAIM THAT ANY PARTY
HERETO MAY HAVE AGAINST ANY OTHER PARTY HERETO FOR ANY CONTRACTUAL
OBLIGATIONS UNDER THIS AGREEMENT; AND, PROVIDED FURTHER, THAT,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO BREACH OF OR
DEVIATION FROM ANY PROVISION(S) OF THIS AGREEMENT SHALL IMPAIR, DIMINISH, OR
AFFECT THE VALIDITY OR ENFORCEABILITY OF THE RELEASE IN SECTION 4.01 OF THIS
AGREEMENT OR THE RELEASE(S) GRANTED IN THIS SECTION 8.10.
8.11 Notices. All notices or deliveries required or permitted
hereunder shall be in writing and shall be deemed given when personally
delivered to the individual hereinafter designated or when actually received
by means of facsimile transmission, overnight mail, or registered or
certified mail, return receipt requested, at the following address, or such
other address as either party may hereafter designate by notice given in
compliance with this Section to the other party:
If to Drawbridge, notice shall be sent to:
Drawbridge Investment Partners LLC
c/o Fortress Investment Group
1251 Avenue of the Americas
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to ALTM, Hencie, and/or Hencie Consulting, notice shall be sent to:
Hencie Consulting Services, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Khan and/or K2VC, notice shall be sent to:
Hencie Consulting Services, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Page Follows]
Executed and delivered as of the date first above written.
HENCIE, INC.,
a Delaware corporation ("Hencie")
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
HENCIE CONSULTING SERVICES, INC.,
a Texas corporation ("Hencie Consulting")
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ("Khan")
/s/ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
K2 VC LTD.,
a Texas limited partnership ("K2VC")
By: K2VC Management, LLC, its general partner
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇
Title: President
ALTERNATE MARKETING NETWORKS, INC.,
a Delaware corporation ("ALTM")
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chairman
DRAWBRIDGE INVESTMENT PARTNERS LLC
a Delaware limited liability company
("Drawbridge")
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
Wire Transfer Instructions:
US$ Fed Wire Instructions
Chase Manhattan Bank, N.Y.
ABA # ▇▇▇-▇▇▇-▇▇▇
F/A/O Goldman ▇▇▇▇▇ & Co., N.Y.
A/C# ▇▇▇-▇-▇▇▇▇▇▇
F/F/C Drawbridge Investment Partners, LLC
A/C # 002-09611-3
Exhibit A
JOINDER AGREEMENT TO RELEASE AGREEMENT
Reference is hereby made to the RELEASE AGREEMENT (as amended and in
effect from time to time, the "Release Agreement") dated as of the 18th day of
February, 2003, by and among DRAWBRIDGE INVESTMENT PARTNERS LLC, a Delaware
limited liability company ("Drawbridge"), ALTERNATE MARKETING NETWORKS, INC.,
a Delaware corporation ("ALTM"), K2 VC LTD., a Texas limited partnership
("K2VC"), HENCIE, INC., a Delaware corporation ("Hencie"), HENCIE CONSULTING
SERVICES, INC., a Texas corporation ("Hencie Consulting"; together with
Hencie, the "Hencie Parties"), ▇▇▇▇ ▇▇▇▇ ("Khan"), and the directors and
certain stockholders of ALTM from time to time a party thereto, a copy of
which is attached hereto as Exhibit A.
The undersigned, _________________________________, hereby agrees that
by his/her execution and delivery of this Joinder Agreement that he/she shall
become a party to the Release Agreement, subject to all of the rights and
obligations applicable to a member of the board of directors of ALTM set
forth in the Release Agreement. This Joinder Agreement shall take effect and
shall become a part of the Release Agreement effective as of February 18,
2003. The undersigned represents that since February 18, 2003, he has not
sold, transferred, assigned, pledged or otherwise disposed of (whether with
or without consideration and whether voluntarily or involuntarily or by
operation of law) any interest in any shares of ALTM Stock.
IN WITNESS WHEREOF, this Joinder Agreement has been duly executed and
delivered by the undersigned as of ____________ __, 200__.
By:
Exhibit B
STOCK OPTION AGREEMENT
[See attached.]