Exhibit 10.18
AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This amendment ("Amendment") is intended to amend the Agreement and Plan of
Reorganization dated May 4, 2000, ("Agreement") by and among TSET, Inc., a
Nevada corporation ("TSET"); EdgeAudio.Com, Inc., an Oregon corporation
("EdgeAudio"); LYNK Enterprises, Inc., an Oregon corporation ("LYNK"); Robert
Lightman, an individual; J. David Hogan, an individual; Eric Alexander, an
individual; and Eterna Internacional, S.A. de C.V., a corporation organized and
existing under the laws of the Republic of Mexico ("Eterna") (LYNK), Robert I.
Lightman, J. David Hogan, Eric J. Alexander, and Eterna are hereinafter
collectively referred to as the "Stockholders"), and Bryan Holbrook
("Holbrook").
RECITALS
TSET, as EdgeAudio's sole shareholder, has authorized EdgeAudio's Articles
of Incorporation to be amended to authorize and issue Preferred Stock
("Preferred Stock") of EdgeAudio to Holbrook.
As a condition to Holbrook's acquisition of the Preferred Stock, certain
provisions of the Agreement must be amended.
AMENDMENT
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree to amend the Agreement as
follows:
1. Holbrook shall hereby be added to the Agreement as a party and shall
have privity of contract with all other parties to the Agreement.
2. Section 5(a) of the Agreement shall be amended as follows:
Effective the date of this Amendment (a) Holbrook shall replace James
Eric Anderson as a member of EdgeAudio's board of directors, and at
that time Holbrook shall also become Chairman of the Board, and (b)
Richard A. Papworth ("Papworth") shall replace J. David Hogan as a
member of EdgeAudio's board of directors and Papworth shall be elected
chief financial officer of EdgeAudio.
3. The following language found at the end of the first sentence of
Section 5(c) of the Agreement shall be deleted: "but with such
consultations and determinations as are consistent with TSET's
ownership of EdgeAudio".
4. The term "TSET" at the end of the first sentence of Section 6 of the
Agreement shall be changed to "its shareholders." The second sentence
of Section 6 of the Agreement shall be amended to read as follows:
"The shareholders intend that the Corporate Business be conducted by
EdgeAudio in substantially the same manner as conducted prior to
execution and delivery of this Amendment and the Agreement."
5. The last sentence of Section 8 of the Agreement shall be amended to
read as follows: "As an additional inducement to management and to
ensure participation by management in the potential future success of
EdgeAudio, TSET, as sole stockholder of EdgeAudio, hereby agrees to
reserve up to 20% of EdgeAudio's authorized capital stock to be used
in Programs to be adopted by EdgeAudio's board of directors and
consents to the full participation of management therein. The terms
for such participation in the EdgeAudio related Programs shall be
established by EdgeAudio's board of directors."
6. Section 9 of the Agreement shall be deleted in its entirety and
replaced by the following: "TSET shall use its best efforts to assist
EdgeAudio to negotiate and consummate a long term manufacturing
agreement with Eterna International S.A. de C.V. and Johnstowne, Inc.
related to the manufacture of product for EdgeAudio upon mutually
agreeable terms."
7. Section 10 of the Agreement shall be deleted in its entirety and
replaced by the following:
(a) In the event that before the earlier of the date all the Earn-out
Shares have been issued, the date the Earn-out Period expires, or
the date of an IPO of EdgeAudio stock, TSET and/or Holbrook
propose to sell part or all of their EdgeAudio stock (other than
in an IPO) to a bona fide third party who is willing to purchase
such stock, and EdgeAudio, TSET and Holbrook have all declined to
exercise any rights to purchase such shares pursuant to Section 3
of the Shareholders Agreement of even data herewith, TSET and/or
Holbrook must, pursuant to the timing requirements of Section 3.4
of the Shareholders Agreement, offer to sell such stock to the
Stockholders, at the same price and on the same terms of the
proposed transfer. The offer shall be made by giving the
Stockholders written notice of the proposed transfer (the
"Proposed Transfer Notice") stating (1) that TSET and/or Holbrook
intends to transfer part or all of their stock, and (2) the terms
of the proposed transfer, including the name and address of the
proposed transferee, the transfer price, and the terms of
payment.
(b) For 30 days after the Stockholders receive a Proposed Transfer
Notice, the Stockholders shall have the option to purchase all of
the offered stock. If the Stockholders elect to purchase the
offered stock the option shall be exercised upon the Stockholders
giving written notice to TSET and/or Holbrook during the option
period, which notice shall demonstrate that the Stockholders have
obtained financing or a commitment for financing sufficient to
fund the purchase. In the event the Stockholders are unable to
agree on how many shares of stock each Stockholder shall
purchase, each Stockholder shall have the right to purchase the
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offered shares in proportion to the respective number of
EdgeAudio Shares set forth opposite such Stockholder's name in
Section 1.
(c) Following exercise of the option, the parties shall close the
purchase no later than 60 days after the Stockholders receive a
Proposed Transfer Notice.
(d) If the option to purchase is not exercised by the Stockholders,
TSET and/or Holbrook may complete the transfer(s), but only in
strict accordance with the terms previously offered by the
transferee stated to the Stockholders as required under Section
10(a).
8. Section 13 of the Agreement shall be deleted in its entirety.
9. Except as expressly amended by this Amendment, all other terms of the
Agreement shall remain in full force and effect.
10. This Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment may
be executed by facsimile signatures, each of which shall be deemed an
original.
11. Section 16 of the Agreement shall be incorporated into this Amendment
by this reference and shall fully apply to the terms of this
Amendment.
12. The following shall be added onto the end of Section 16(f) of the
Agreement: "TO BRYAN HOLBROOK, 142 N. Blue Sage, Layton, Utah 84040
(801) 544-0690".
13. Except as set forth below, EdgeAudio shall not take any of the
following actions or participate in the following transactions without
TSET's prior written approval: (a) the sale of all or substantially
all of its assets; (b) a merger, consolidation or similar transaction;
(c) confession of any judgment; (d) amendment of its articles of
incorporation or bylaws; (e) dissolution, winding up or liquidation;
(f) the filing of any voluntary petition in bankruptcy; or (g) any
action that requires approval under the Oregon Business Corporation
Act (the "Act") of more than a majority of the shares entitled to vote
on the matter. Notwithstanding the previous sentence or the Act,
TSET's approval shall not be required for any action or transaction
that would result in TSET receiving or retaining shares or other
consideration equal in value to the consideration paid by TSET for its
shares of EdgeAudio plus any direct capital contributions made by TSET
to EdgeAudio.
14. Promptly after execution of the Amendment, EdgeAudio shall issue new
share certificates to document the ownership of its shares.
15. EdgeAudio shall cooperate with TSET and supply information related to
EdgeAudio as necessary to enable TSET to comply with its obligations
to supply information and make reports required by federal and state
securities law.
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16. EdgeAudio, Robert I. Lightman, LYNK Enterprises, Inc., J. David Hogan,
Eric J. Alexander, and Eterna Internacional, S.A. de C.V. hereby
release TSET and TSET hereby releases the above referenced parties
from any and all claims and causes of action identified or
unidentified that may have arisen after May 4, 2000, related to TSET's
obligation to provide additional funding to EdgeAudio or otherwise
arising from any cause whatsoever to the extent related to or arising
out of the Agreement. This release is intended to release only claims
related to breaches and causes of action arising on or before the date
of this Amendment, but is not intended to and does not release any of
the above referenced parties from their continuing obligations under
the Agreement as modified by this Amendment.
17. EdgeAudio acknowledges that TSET has satisfied $186,100 of its
obligation under Section 7 of the Agreement to provide working
capital. TSET's obligation to provide the remainder of the funding
described in Section 7 of the Agreement shall be suspended until
Holbrook has contributed the full $700,000 he is obligated to provide
under the Preferred Stock Purchase Agreement of even date herewith.
18. Section 14 of the Agreement shall be incorporated into this Amendment
and the Preferred Stock Purchase Agreement, and any Claims related to
this Amendment or the Preferred Stock Purchase Agreement shall be
resolved using the dispute resolution mechanism contained in Section
14 of the Agreement.
19. The parties agree to cooperate with each other and take such other
actions and sign such other documentation following the closing as is
necessary to effectuate the intent of this Amendment.
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IN WITNESS WHEREOF, the parties have executed this Amendment effective
September 12, 2000.
TSET, Inc. ----------------------------------
Robert I. Lightman, individually
By: /s/ Jeffrey D. Wilson
----------------------------------- ----------------------------------
Jeffrey D. Wilson, Chairman and J. David Hogan, individually
Chief Executive Officer
EdgeAudio.Com, Inc. ----------------------------------
Eric J. Alexander, individually
/s/ Bryan Holbrook
By: ---------------------------------- ----------------------------------
Robert I. Lightman Bryan Holbrook, individually
President
LYNK Enterprises, Inc.
By: --------------------------------
Winthrop E. Jeanfreau
President
Eterna Internacional, S.A. de C.V.
By: --------------------------------
James Eric Anderson
President
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IN WITNESS WHEREOF, the parties have executed this Amendment effective
September 12, 2000.
TSET, Inc. /s/ Robert I. Lightman
--------------------------------
Robert I. Lightman, individually
By: /s/ J. David Hogan
------------------------------------- --------------------------------
Jeffrey D. Wilson, Chairman and J. David Hogan, individually
Chief Executive Officer
EdgeAudio.Com, Inc. --------------------------------
Eric J. Alexander, individually
By: /s/ Robert I. Lightman
------------------------------------- --------------------------------
Robert I. Lightman Bryan Holbrook, individually
President
LYNK Enterprises, Inc.
By: /s/ Winthrop E. Jeanfreau
------------------------------------
Winthrop E. Jeanfreau
President
Eterna Internacional, S.A. de C.V.
By: /s/ James Eric Anderson
------------------------------------
James Eric Anderson
President
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