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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 2, 1998
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Date of report (Date of earliest event reported)
TERRA NATURAL RESOURCES CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
NEVADA
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(State or Other Jurisdiction of Incorporation)
001-12867 88-0219765
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(Commission File Number) (IRS Employer Identification No.)
5038 N. PARKWAY CALABASAS, SUITE #100, CALABASAS, CA 91302
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(Address of Principal Executive Offices) (Zip Code)
(818) 591-4400
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(Issuer's Telephone Number, Including Area Code)
NEVADA MANHATTAN MINING INCORPORATED
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(Former Name, if Changed Since Last Report)
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Item 5. Other Events.
On September 2, 1998, TiNV1, Inc., a newly-formed California corporation
(the "Purchaser"), entered into a Subscription Agreement and a letter agreement,
each dated as of August 28, 1998 (collectively, the "Purchase Agreements"), with
Terra Natural Resources Corporation (formerly Nevada Manhattan Mining
Incorporated) (the "Company") pursuant to which the Purchaser purchased
5,500,000 shares of the Company's common stock from the Company for $500,000.
The Purchaser has advised the Company that the source of the funds used to
purchase the stock was capital contributions. The 5,500,000 shares represents
approximately 14% of the Company's presently outstanding common stock on a pro
forma basis. The Purchase Agreements provide that the Company's Board of
Directors will be expanded to seven and that three designees of the Purchaser
will be elected to the Board of Directors. Subject to certain exceptions
provided for in the Purchase Agreements, including exceptions arising on sales
of the Company's common stock by the Purchaser, the Company has also agreed that
three designees of the Purchaser will be included in management's slate of
nominees for the Board of Directors and that the Company will use its continuing
best efforts to cause such nominees to be elected to the Board. The Purchase
Agreements provide that all acquisitions and divestitures by the Company which
require Board Approval and any issuances of securities to the Company's
debentureholders must be approved by a supermajority of the Company's directors.
The Company has agreed to use its best efforts to create a class of
preferred stock (the "Preferred Stock") automatically convertible into common
stock on a public sale with attributes no less favorable than those comprising
the shares purchased by the Purchaser. The Preferred Stock voting as a class
will be entitled to elect three Directors (except as provided in the Purchase
Agreements), and the Company has the right to exchange the Preferred Stock for
the common stock acquired by the Purchaser.
If the Purchaser's nominees are not elected to the Board of Directors in
accordance with the Purchase Agreement, the Purchaser will have the right to
sell any of the common stock purchased by it (or Preferred Stock issued in
exchange therefor) to the Company at a price equal to the greater of the
purchase price therefor and the average price established by an independent
valuation by two major accounting firms. The Purchase Agreements provide that
the Purchaser shall have certain other rights if its designees are not so
elected in the event that the Company does not have legally sufficient funds to
repurchase its stock.
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Simultaneously with the execution of the Purchase Agreements, the Company
entered into an option agreement (the "Option Agreement") with the Purchaser,
which Option Agreement is subject to shareholder approval, including approval of
an amendment to the Company's charter documents to increase the number of
authorized shares of common stock to 250,000,000. The Option Agreement allows
the optionee to purchase on or before September 1, 2005, 70,000,000 shares of
the Company's common stock at a purchase price of $.335 per share. (The
70,000,000 shares, together with the 5,500,000 shares would represent
approximately 69% of the Company's presently outstanding stock on a pro forma
basis.) If the required shareholder approval is not obtained within 150 days of
August 28, 1998, then the Option Agreement will be void. The Purchaser has
advised the Company's Board of Directors that the Purchaser plans to transfer a
portion of the options evidenced by the Option Agreement to Christopher Michaels
and Jeffrey Kramer, the Company's two principal executive officers, to induce
them to remain with the Company. While the number of options which may be
transferred has not been specified, it is anticipated that it will be material.
In the event the Company does not obtain the aforesaid shareholder approval
within the 150 day period, the Purchaser may elect to rescind the Purchase
Agreements and receive a refund of the purchase price or obtain from Messrs.
Michaels and Kramer for no consideration all of the Company securities owned by
them with the exception of stock options, which will then be canceled.
A copy of the Purchase Agreements, the Option Agreement and the letter
agreement between Messrs. Michaels and Kramer and the Purchaser are attached as
exhibits to this Form 8-K. Any descriptions of such agreements are qualified in
their entirety by the aforesaid exhibits, which are incorporated herein by this
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Reference
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(99) Additional Exhibits
Subscription Agreement dated as of August 28, 1998 Exhibit (99.1)
Agreement dated as of August 28, 1998 Exhibit (99.2)
Option Agreement dated as of August 28, 1998 Exhibit (99.3)
Letter Agreement dated as of August 28, 1998 Exhibit (99.4)
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TERRA NATURAL RESOURCES CORPORATION
(Registrant)
Date: September 14, 1998 BY: /s/ Jeffrey S. Kramer
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JEFFREY S. KRAMER
CHIEF FINANCIAL OFFICER
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EXHIBIT INDEX
EXHIBIT NO DESCRIPTION
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99.1 Subscription Agreement dated as of August 28, 1998
99.2 Agreement dated as of August 28, 1998
99.3 Option Agreement dated as of August 28, 1998
99.4 Letter Agreement dated as of August 28, 1998
<PAGE> 1
EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
Nevada Manhattan Mining Incorporated
5038 North Parkway Calabasas
Suite 100
Calabasas, California 91302
Attn: Christopher D. Michaels, President
Gentlemen:
This letter is delivered to you in connection with the issuance of
shares of Common Stock and options to purchase Common Stock (the "Securities")
of Nevada Manhattan Mining Incorporated, a Nevada corporation (the "Company"),
by the Company to the undersigned ("Subscriber"), as provided in this
Subscription Agreement.
A. Agreements, Representations, and Warranties of Subscriber.
1. Subscription to Purchase Shares. Subject to paragraph A.2(e), the
Subscriber hereby agrees to purchase the number of shares of Securities
indicated on the signature page, subject to acceptance of this subscription by
the Company. The Subscriber shall pay the purchase price for the Securities by
delivering to the Company with this Agreement a check for the full amount of the
purchase price of the Securities indicated on the signature page (the
"Subscription Price").
2. Stock Option.
(a) As a material inducement to Subscriber to purchase the
Securities, the Company desires to grant to Subscriber options ("Options") to
purchase up to 70,000,000 shares ("Option Shares") of the Company's Securities
pursuant to the terms of a Stock Option Agreement, a copy of which is attached
hereto as Exhibit "A" ("Option Agreement"). The Subscription Shares, Options,
and Option Shares are collectively referred to as "Subscription Shares."
(b) The parties acknowledge and agree that the Company's
present number of authorized shares is insufficient to cover the Option Shares,
and that the Company must obtain its shareholders' approval ("Shareholders'
Approval") to: (i) amend its certificate of incorporation to increase its
authorized shares to 250,000,000, and (ii) enter into the Option Agreement.
(c) Within forty-five (45) days of the date of this
Subscription Agreement, the Company shall file proxy materials with the
Securities and Exchange Commission relating to its solicitation of the
Shareholders' Approval to: (i) amend this Company's certificate of incorporation
to increase the number of this Company's authorized shares of common stock to
250,000,000; and (ii) approve the Option Agreement. The Company agrees,
represents, and warrants that the foregoing solicitation shall be performed in
accordance with applicable law governing the solicitation of shareholder votes,
including, but not limited to applicable state and federal proxy rules and
regulations. The Company shall use its best efforts to obtain the Shareholders'
Approval.
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(d) The Company shall immediately execute the Stock Option
Agreement, provided however, that the effectiveness of the Stock Option
Agreement is subject to Shareholders' Approval of the items in paragraph A.2.(c)
above.
(e) If the Company is unable to obtain Shareholders' Approval
of the items in paragraph A.2.(c) above within 150 days of the date of this
Subscription Agreement, then the Option Agreement shall be void, and subject to
paragraph A.2.(f), Subscriber shall have the right to rescind this Subscription
Agreement, return any Subscribed Shares to Company, and obtain a full refund of
the Subscription Price ("Subscriber's Rescission Rights").
(f) The parties acknowledge that the Subscriber has entered
into an agreement with Jeffrey S. Kramer and Christopher D. Michaels, who are
officers and directors of this Company. Under the terms of the subject
agreement, Messrs. Kramer and Michaels have agreed, among other things, that if
the Company is unable to obtain the Shareholders' Approval within 150 days of
the date of this letter, then in lieu of Subscriber's exercise of Subscriber's
Rescission Rights that they will, without any further consideration: (a) assign
and transfer to TiNV1 all their respective right, title, and interest, in and to
all securities, including, but not limited to common shares of the Company, that
they directly or indirectly own, excluding options to acquire the Company's
securities, and (b) cancel and waive any further rights that they have pursuant
to any options to acquire the Company's securities.
3. Representations, Warranties and Covenants of Subscriber. The
Subscriber hereby represents and warrants to, and covenants with, the Company as
follows:
(a) The Subscriber has received and carefully reviewed the following
materials, all of which are incorporated herein by reference ("Offering
Materials") describing the Securities, the offering under which the
Securities are being offered, and the business of the Company:
(i) A copy of Amendment No. 2 to Form 10 filed April 3, 1997;
(ii) A copy of the Company's Form 10-QSB for the quarter ending
Feb. 28, 1998;
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(iii) Press Releases dated: December 1, 1997; January 12, 1998;
February 27, 1998; March 11, 1998; March 31, 1998; April 29, 1998;
June 3, 1998; July 15, 1998; July 22, 1998 (2); July 30, 1998; and
August 3, 1998; and
(iv) Audit Confirmation prepared by U.S. Stock Transfer
Corporation dated August 17, 1998, which shows stock information as of
May 31, 1998.
(b) The information in the Investor Questionnaire furnished to the
Company by the Subscriber is complete and correct;
(c) The Subscriber is an experienced investor, is capable of
evaluating the merits and risks of the investment, can hold the
Subscription Shares indefinitely, and has the ability to afford the
complete loss of Subscriber's investment in the Subscription Shares;
(d) The Subscriber has not received, and is not aware that anyone else
has received, any general or public solicitation or advertisement
pertaining to any offer or sale of any securities of the Company;
(e) The Subscriber has received all information about the Company and
the investment covered by this Agreement that the Subscriber desires and
feels is necessary to enable the Subscriber to recognize and evaluate the
merits and risks of the investment, and has had the opportunity to ask
questions of, and receive answers from, the Company and its officers,
directors and agents;
(f) The Subscription Shares will be acquired by the Subscriber for the
Subscriber's own account for investment and not with a view to or for sale
in connection with any distribution thereof;
(g) There do not currently exist any circumstances which will compel
the Subscriber to sell, transfer, or otherwise distribute any of the
Subscription Shares or any interest therein; and
(h) All of the Subscriber's beneficial owner(s) are accredited
investors as that term is defined in Regulation D under the Securities Act
of 1933, as amended.
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4. Securities Laws Matters. The Subscriber is aware of and acknowledges
and agrees with the Company as follows:
(a) the Subscription Shares will not be registered under the federal
Securities Act of 1933, as amended (the "Act"), in reliance on the
so-called "private placement" exemption provided by Regulation D
promulgated thereunder and will not be registered or qualified under
applicable securities laws of any state in reliance on similar exemptions;
(b) The Subscription Shares, when issued, will be "restricted
securities" within the meaning of Rule 144 promulgated by the Securities
and Exchange Commission (the "Commission") under the Act;
(c) Any person to whom any of the Subscription Shares, or any interest
therein, are transferred will, in turn, be subject to applicable retransfer
restrictions;
(d) The Subscriber fully comprehends that the Company is relying to a
material degree on the representations, warranties and agreements contained
herein and with such realization authorizes the Company to act as it may
see fit in full reliance hereon, including the placement on the
certificates or other documents evidencing the Subscription Shares of the
following legend and any legends required by any applicable state
securities laws:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE RESTRICTED SECURITIES AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR
TRANSFERRED UNLESS SO REGISTERED OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL SKILLED IN SECURITIES MATTERS AND OTHER EVIDENCE OF
COMPLIANCE WITH THE ACT PRIOR TO PERMITTING A TRANSFER OF THE
SECURITIES."
The Subscriber understands that the imposition of such a legend
condition may limit or destroy the value, and the value as collateral, of
the Subscription Shares;
(e) The Subscriber agrees that none of the Subscription Shares or any
interest therein will be sold, transferred or otherwise disposed of unless
registered under the Act, without his having first presented to the Company
or its counsel (i) a written opinion of counsel experienced in securities
law matters indicating that the proposed disposition will not be in
violation of any of the registration provisions of the Act and the rules
and regulations promulgated thereunder, or (ii) a "no-action" letter to
such effect issued by the Staff of the Commission; and
(f) The Subscriber acknowledges that the foregoing is not a complete
statement of the law applicable to resale of the Subscription Shares, but
merely an outline of some of the more salient features. For legal advice in
these matters, the Subscriber will continue to rely on its own legal
counsel as the Subscriber has throughout this transaction concerning the
purchase of the Subscription Shares.
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5. Indemnification. The Subscriber hereby indemnifies and holds
harmless the Company and its officers, directors, shareholders, agents,
employees, attorneys, successors, and assigns from and against all damages,
losses, costs, liabilities, and expenses (including costs of investigation,
defense, and attorneys' fees) incurred by reason of the failure of the
Subscriber to fulfill any of the Subscriber's obligations hereunder or by reason
of any breach or inaccuracy of any of the representations or warranties made by
the Subscriber herein.
B. Agreements, Representations and Warranties of the Company.
1. Company's Representations and Warranties. As an inducement to
Subscriber to execute and deliver this Subscription Agreement, the Company
represents and warrants to Subscriber that:
(a) The Offering Materials, and any other written disclosures
made by Company to Subscriber (collectively "Offering Materials"), do not
contain any untrue statement of a material fact or omit to state a 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;
(b) The Company and its subsidiaries have been duly organized
and are validly existing as corporations in good standing under the laws of the
jurisdiction of their organization, with full power and authority (corporate and
other) to own or lease its properties and conduct its business as described in
the Offering Materials and each is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the business conducted
by it or the location of the properties or leased by it, makes such
qualification necessary, except in each case where the failure to so qualify
would not have a material adverse effect on the financial condition or business
prospects of the Company and/or its subsidiary; and the Company and its
subsidiaries hold all material licenses, certificates and permits from
governmental authorities necessary to the conduct of its business as described
in the Offering Materials;
(c) Upon issuance and delivery and payment therefor, in the
manner described, the Subscription Shares will be, duly authorized, validly
issued, fully paid and non-assessable;
(d) To the best of Company's knowledge, which shall include
the knowledge of the Company's officers and directors, except as described in or
contemplated by the Offering Materials, there has not been any material adverse
change in, or any adverse development which would materially effect the
business, properties, financial condition, results of operations or prospects of
the Company and its subsidiary taken as a whole from the date as of which
information is given in the Offering Materials;
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(e) To the best of Company's knowledge, which shall include
the knowledge of the Company's officers and directors, except as described in
the Offering Materials, there is no litigation or governmental proceeding to
which the Company or its subsidiaries is a party or to which the property of the
Company or its subsidiaries is subject, or which is pending, or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries which would result in any material adverse change in the financial
condition, results of operations, business or prospects of the Company or which
is required to be disclosed in the Offering Materials;
(f) To the best of Company's knowledge, which shall include
the knowledge of the Company's officers and directors, neither the Company nor
its subsidiaries is in violation of any law or ordinance, governmental rule or
regulation or court decree to which it may be subject which violation would have
a material adverse effect on the condition (financial or other), properties,
perspective results of operations or net worth of the Company and its
subsidiaries taken as a whole;
(g) As of May 31, 1998, the Company had 24,473,343 shares of
common stock issued and outstanding, and has outstanding options for 430,000
shares. Since that date, the Company has issued: (i) 6,600,000 shares pursuant
to a private placement in June and July 1998 ; and (ii) 1,500,000 shares
pursuant to a stock exchange which closed in June and July 1998. In addition,
the Company has obligations to issue not more than an additional 5,380,000
shares of common stock, and may have an obligation to issue additional shares
under certain conditions to its debenture holders. Assuming full exercise of all
options, and excluding the issuance of additional shares to its debenture
holders, the Company will have issued and outstanding a total of approximately
38,383,343 shares of common stock;
(h) Except as disclosed in paragraph B.1.(g), above, the
Company has no commitment or obligation to issue additional shares of any class
of stock or options, as of the date of this Subscription Agreement.
(i) Subject to the Shareholders' Approval referenced above,
the Company has the full right, power and authority to execute, deliver, perform
and comply with this Agreement and has taken all other actions necessary to
enable the Company to comply with the terms hereof, including, but not limited
to the issuance of the Subscription Shares and the Options. This Agreement has
been duly and validly executed and delivered by the Company and constitutes the
valid and legally binding obligation of the Company.
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2. Indemnification. The Company shall indemnify, defend, and hold
harmless the Subscriber, its officers, directors, shareholders, agents,
employees, attorneys, successors, and assigns from and against all damages,
losses, costs, liabilities, and expenses (including costs of investigation,
defense, and attorneys' fees) incurred by reason of the failure of the Company
to fulfill any of the Company's obligations hereunder or by reason of any breach
or inaccuracy of any of the representations or warranties made by the Company
herein.
C. Miscellaneous.
1. Survival.The respective agreements, representations, and warranties,
of the Company and Subscriber, shall survive the delivery of the Shares to
the Subscriber, without limitation.
2. Arbitration. Unless the relief sought requires the exercise of the
equity powers of a court of competent jurisdiction, any dispute arising in
connection with the offer, sale or purchase of the Subscription Shares, the
interpretation or enforcement of the provisions of this Agreement, or the
application or validity thereof, shall be submitted to binding arbitration. Such
arbitration proceedings shall be held in Los Angeles, California, in accordance
with the rules then obtaining of the American Arbitration Association. The
provisions of Sections 1282.6, 1283, and 1283.05 of the California Code of Civil
Procedure apply to the arbitration. This agreement to arbitrate shall be
specifically enforceable. Any award rendered in any such arbitration proceedings
shall be final and binding on each of the parties hereto, and judgment may be
entered thereon in any court of competent jurisdiction.
3. No Assignment. The Subscriber shall not transfer or assign this
Subscription Agreement.
4. Entire Agreement. This Subscription Agreement, Stock Option
Agreement, and all other written agreements relating to this Subscription
Agreement and the Subscription Shares constitute the entire agreement between
the Subscriber and the Company and may be amended only by a writing executed by
both parties.
5. Governing Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of California.
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6. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given on the date of service if
personally served on the party to whom notice is to be given or on the third day
after mailing if mailed to the party to whom notice is to be given, by
first-class mail, registered or certified, postage prepaid, and properly
addressed, to the Subscriber or the Company at their respective addresses set
forth herein or at such other address as either party shall give for purposes of
notice in accordance with the foregoing.
7. Cancellation. The Subscriber may cancel this Subscription Agreement
and the offer and subscription made hereby by notice of cancellation to the
Company at any time prior to the date notice of acceptance is given to the
Subscriber by the Company. The Subscriber acknowledges and agrees that this
Subscription Agreement shall not be binding on the Company unless and until it
has been accepted by the Company at its office in Calabasas, California and
that, after notice of acceptance has been given to the Subscriber, the
Subscriber shall not be entitled to cancel, terminate, or revoke this
Subscription Agreement or the offer and subscription made hereby or any
agreements of the Subscriber hereunder, except as provided in paragraph A.2(e).
8. Attorneys' Fees. If any party commences any suit or action,
including but not limited to any arbitration, arising out of or connected with
this Agreement then the prevailing party(ies) shall recover his or its
reasonable attorneys' fees from the non-prevailing party(ies) in addition to any
other relief awarded to the prevailing party(ies).
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NEVADA MANHATTAN MINING INCORPORATED
Private Placement of Common Stock
(Signature Page for Subscription by Entities)
The Subscriber is (complete one):
CORPORATION incorporated in State of California.
PARTNERSHIP formed under laws of State of _______________________
TRUST established under laws of State of ________________________
Number of shares of the Securities
subscribed for: 5,500,000 Common Stock
70,000,000 Options to Purchase
Common Stock
(Subject to Shareholder Approval)
Subscription Price of the Securities
subscribed for: $500,000.00
(Please print or type all information exactly as you wish it to appear on the
Company's records)
5,500,000 shares of common stock in the name of:
TiNV1 Inc.
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Name of Subscriber Federal Taxpayer I.D. No.
701 Ocean Avenue, Suite 108, Santa Monica, California
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Principal Office Address Telephone
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The undersigned officer, partner, trustee, or other signatory certifies that he
or she has full power and authority to execute this Subscription Agreement on
behalf of the Subscriber or Company and that the purchase and sale of the
Company has been duly authorized and is not prohibited by the governing
instrument of the Subscriber or Company.
DATED: As of August 28, 1998 TiNV1, INC.
/s/ Tetsuo Kitagawa
By:___________________________
Tetsuo Kitagawa,
President and Secretary
DATED: As of August 28, 1998 NEVADA MANHATTAN MINING
INCORPORATED
/s/ Christopher D. Michaels
By:____________________________
Christopher D.Michaels, President
/s/ Jeffrey S. Kramer
By:____________________________
Jeffrey S. Kramer, Secretary
<PAGE> 1
EXHIBIT 99.2
(NEVADA MANHATTAN MINING LETTERHEAD)
August 28, 1998
TiNVl, Inc.
701 Ocean Avenue, Suite 108
Santa Monica, CA 90402
Gentlemen:
As an inducement to TiNV1, Inc. ("TiNV1") to enter into the Subscription
Agreement dated as of August 28, 1998, whereby TiNV1 has agreed to subscribe
initially for Five Million, Five Hundred and Fifty Thousand (5,500,000) shares
of common stock ("Subscription Shares") of Nevada Manhattan Mining, Inc. (the
"Company") for Five Hundred Thousand Dollars ($500,000.00) in capital, we hereby
agree to the following:
1. The Board of Directors of the Company will immediately institute the
expansion of the Company's Board of Directors to a total of seven members.
2. Three designees of TiNVl will upon such expansion be elected to the Board of
Directors of the Company.
3. Thereafter, three designees of TiNV1, subject to increase or decrease, as
provided below, will be included in management's slate of nominees for the Board
of Directors, and the Company will use its continuing best efforts to cause such
nominees to be elected to the Board. The number of TiNV1's designees shall
coincide with the number of directors that TiNV1 is entitled to elect pursuant
to paragraph 5 below.
4. The nominees proposed by TiNV1 from time to time shall possess such
qualifications, character and reputation as are reasonably appropriate for
members of the Board of Directors of the Company.
<PAGE> 2
5. The Company shall use its best efforts to create a class of preferred stock
("Preferred Stock") which possess attributes, rights, privileges, and
preferences, which are no less favorable than those of the common stock
comprising the Subscription Shares. Upon creation of the Preferred Stock, the
Company shall have the right to exchange the common stock comprising the
Subscription Shares to Preferred Stock on a one for one basis. The Preferred
Stock shall be converted back into common stock in connection with any
securities registration of the subject securities under the Securities Act of
1933, as amended. TiNV1 shall be the sole holder of the Preferred Stock. Subject
to paragraph 6, TiNV1, as holder of the Preferred Stock, voting as a separate
class, shall be entitled to elect three Directors, as long as the Company's
Board of Directors consists of seven members. If the number of members of the
Board of Directors increases (or decreases), then the Preferred Stock's right to
elect Directors shall increase (or decrease) by one director for every increase
(or decrease) of two members of the Board of Directors. For example, if the
Board of Directors is increased to nine members, then TiNV1 shall have the right
to elect four Directors.
6. Notwithstanding the foregoing, if TiNV1's beneficial ownership of its
Subscription Shares, whether in the form of common stock or Preferred Stock
drops below 2,750,000 or 1,375,000 shares, respectively, adjusted for stock
dividends, merger, reorganization, reclassification, stock splits, or any other
adjustment to the Company's capital structure, then the number of Directors that
TiNV1 shall have a right to nominate and/or elect shall be reduced by one-third
and two-thirds, respectively. TiNV1's right to nominate and/or elect Directors
pursuant to paragraphs 3 and 5 shall terminate if its beneficial ownership of
the Subscription Shares drops below 550,000 shares.
7. TiNV1 agrees to vote the maximum number of votes it has, per candidate, for
its designated director nominees unless the voting for the election of directors
is subject to cumulative voting. If TiNVl's nominees are not elected to the
Board of Directors of the Company as provided in paragraphs 3 and 5, TiNV1 shall
have the right for a 60-day period thereafter to put any or all of its
Subscription Shares, whether common stock or Preferred Stock (collectively "Put
Stock"), as the case may be, then held by it to the Company at a price, which is
the greater of: (a) the purchase price therefor, or (b) the average price
established by an independent valuation as of the date of the corporate action
giving rise to the valuation, by two of the present "Big 5" accounting firms, or
their sucessors. TiNV1 and the Company shall each appoint an accounting firm to
perform a valuation of the Subscription Shares ("Put Price") within thirty (30)
days of the event giving rise to the valuation. The respective accounting firms
shall submit their valuations within thirty (30) days after their respective
appointment. The Company shall purchase the Put Stock from TiNV1 within thirty
(30) days of its receipt of the subject valuations from the accounting firms.
<PAGE> 3
8. If the Company has insufficient legally available funds to purchase the Put
Stock, then the subject 60 day period shall not commence until the Company has
legally available funds to purchase the Put Stock. Further, if the Company has
insufficient legally available funds to purchase the Put Stock, then at TiNV1's
election, it may sell its Subscription Shares to a bona fide third party. The
Company shall issue a promissory note ("Note") to TiNV1 for the difference
between the Put Price and the third party sale. The unpaid principal balance
shall bear interest at the rate of Bank of America's (or successor thereto) then
prime rate plus 2 points. To the extent legally permissible, the unpaid
principal and accrued interest thereon shall be fully amortized and paid in
quarterly installments, with the first payment due and payable ninety days after
the date of the subject note. To the extent legally permissible, the remaining
unpaid principal and accrued interest thereon shall be due and payable on the
second anniversary of the Note. The Company may prepay the balance of the note
without penalty. If Company is in default under the Note, then TiNV1 shall be
entitled to recover its costs from the Company, including attorneys' fees to
enforce collection under the Note.
9. All acquisitions and divestitures by the Company, which require Board
approval, and any issuances of securities to the Company's debenture holders,
must initially be approved by 5 of the Company's 7 Directors. If the Board of
Directors increases in size, then such acquisitions, divestitures, and any
issuance to the debenture holders must he approved by a super majority vote of
two thirds of all members of the Board of Directors, and not a super majority of
a quorum of the Board of Directors.
10. The Company hereby agrees to enter into an employment agreement with Daniel
Barton Pritchett of Los Angeles, California, for a period of not less than one
year. Mr. Pritchett will be designated as a Vice President of Financing, with
his duties to encompass the financial expansion of the Company, and such other
duties as are designated by the Board of Directors. Mr. Pritchett shall receive
compensation in the amount of $3,000.00 per month.
11. The Company represents and warrants to TiNV1, which shall survive without
limitation, that it has the full right, power and authority to execute, deliver,
perform and comply with the terms and conditions of this agreement, and that it
has taken all other actions necessary to enable the Company to comply with the
terms and conditions hereof. This letter agreement has been duly and validly
executed and delivered by the Company and constitutes the valid and legally
binding obligation of the Company.
<PAGE> 4
12. This Agreement shall be governed by and construed in accordance with the
laws of the State of California. If any provision of this Agreement is found by
a court of competent jurisdiction to be invalid, illegal, or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not be
affected thereby.
13. If any party to this Agreement shall commence any suit or action to
interpret or enforce this Agreement, the prevailing party in such action shall
recover such party's costs and expenses incurred in connection therewith,
including attorneys' fees. 14. This Agreement shall inure to the benefit of and
be binding upon all of the parties hereto and their respective, executors,
administrators, successors and assigns.
Sincerely,
NEVADA MANHATTAN MINING
INCORPORATED
/s/ Christopher D. Michaels
By:____________________________
Christopher D. Michaels, President
/s/ Jeffrey S. Kramer
By:____________________________
Jeffrey S. Kramer, Secretary
ACKNOWLEDGED AND AGREED:
as of Aug. 28th
DATED: ______________, 1998 TiNV1, INC.
/s/ Tetsuo Kitagawa
By:____________________________
Tetsuo Kitagawa,
President and Secretary
<PAGE> 1
EXHIBIT 99.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY
NOT BE SOLD OR TRANSFERRED UNLESS SO REGISTERED OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL SKILLED IN SECURITIES MATTERS AND OTHER EVIDENCE OF
COMPLIANCE WITH THE ACT PRIOR TO PERMITTING A TRANSFER OF THE SECURITIES
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Option Agreement"), is dated as of August
28, 1998 and is made by and between Nevada Manhattan Mining Incorporated, a
Nevada corporation ("Company") and TiNV1, Inc., a California corporation
("Option Holder").
RECITALS
A. The Company is concurrently issuing 5,500,000 shares of its common
capital stock ("Subscription Shares") to Option Holder in a private placement
pursuant to the terms of a Subscription Agreement of even date herewith.
B. As an inducement to Option Holder to purchase the Subscription
Shares, Company desires to grant an option to Option Holder to purchase up to an
additional 70,000,000 shares of its common stock, as provided in this Option
Agreement.
C. The parties acknowledge that the Company's present number of
authorized shares is insufficient to cover the Option Shares, and that the
Company must obtain its shareholders' approval ("Shareholders' Approval") to:
(i) amend its certificate of incorporation to increase its authorized shares to
250,000,000, and (ii) enter into the Option Agreement as a condition to the
effectiveness of this Option Agreement. The Company intends to use its best
efforts to obtain the requisite Shareholders' Approval.
NOW, THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. Grant of Option.
a. The Company hereby grants options ("Options") to the Option Holder
to purchase up to Seventy Million (70,000,000) shares of common stock ("Option
Shares") or any other replacement security of Company whether by way of
reclassification, exchange, merger, consolidation, exchange, recapitalization,
or other reorganization of the Company. The Options shall be evidenced solely by
this Option Agreement.
<PAGE> 2
b. This Option Agreement shall commence as of the date of this
Agreement and shall terminate at 5:00 p.m., California time, on September 1,
2005 unless extended by the mutual agreement of the parties; provided however,
that if the Company is unable to obtain the Shareholders' Approval, referenced
above, within 150 days of the date of this Option Agreement, then this Option
Agreement shall be void at the election of the Subscriber.
c. Options may be exercised in full or in part by Option Holder's
written notice (the "Notice") to the Company, specifying the number of shares of
Option Stock to be purchased, accompanied by: (i) the payment of the exercise
price ("Exercise Price") specified in paragraph 1(d) in the form of Option
Holder's check made payable to Company, and (ii) such other investment
representations and warranties as Company reasonably requests. Upon Company's
receipt of the Notice and clearance of Option Holder's check, it shall cause
delivery of share certificates, with appropriate securities legends, to the
Option Holder, representing the Option Shares purchased by Option Holder.
Company shall use its best efforts to immediately deposit and expedite clearing
of Option Holder's check. Option Holder's purchase of Option Shares is subject
to applicable securities laws.
d. Exercise Price.
The Exercise Price for each share of the Option Shares shall be the
average of the bid and ask prices of the Company's common stock as of the close
of trading on August 28, 1998. If the Company subdivides or combines its
outstanding shares of common stock, by reclassification, recapitalization,
reorganization, merger, or otherwise, the Exercise Price shall be
proportionately decreased or increased, as the case may be.
2. Company's Agreement, Representations, and Warranties.
The Company hereby agrees, represents and warrants to Option Holder,
which shall survive without limitation, that:
a. Subject to the Shareholders' Approval, the Company has the full
right, power and authority to execute, deliver, perform and comply with this
Option Agreement and has taken all other actions necessary to enable the Company
to comply with the terms hereof. This Option Agreement has been duly and validly
executed and delivered by the Company and constitutes the valid and legally
binding obligation of the Company; and
b. Subject to the Shareholders' Approval, the Company agrees that it
shall reserve sufficient shares of Common Stock to provide for Option Holder's
exercise of the Options.
<PAGE> 3
3. Indemnification.
The Company shall indemnify, defend, and hold harmless the Option
Holder, its officers, directors, shareholders, agents, employees, attorneys,
successors, and assigns from and against all damages, losses, costs,
liabilities, and expenses (including costs of investigation, defense, and
attorneys' fees) incurred by reason of the failure of the Company to fulfill any
of the Company's obligations hereunder or by reason of any breach or inaccuracy
of any of the representations or warranties made by the Company herein.
4. Miscellaneous.
a) Modifications.
The parties may, by mutual consent, amend, modify, supplement and waive
any right under this Option Agreement in any manner agreed by them in writing at
any time.
b) Applicable Law.
This Option Agreement shall be governed by and construed in accordance
with the laws of the state of California.
c) Severability.
If any provision of this Option Agreement shall be held to be invalid,
illegal or unenforceable, it shall be deemed severable from the remaining
provisions hereof which shall remain in full force and effect.
d) Waiver.
No waiver of any provision of this Option Agreement or any breach
thereof shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) or any other breach hereunder nor shall such
waiver constitute a continuing waiver. Either party may waive performance of any
provision of this Option Agreement, the non-performance of which would otherwise
constitute a breach of this Agreement, including but not limited to the
non-performance of any condition precedent to such party's performance, without
affecting the enforceability of this Option Agreement and the provisions
contained herein.
e) Successors and Assigns.
The terms and conditions of this Option Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties hereto. Option Holder may assign all or any portion of this Option
Agreement and the Option Securities to any party without the Company's prior
written consent, subject to compliance with applicable laws, including, but not
limited to federal and state securities laws.
<PAGE> 4
f) Attorneys' Fees.
If any legal action is instituted to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to actual attorneys' fees
in addition to any other relief to which that party may be entitled.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date first above written:
"COMPANY"
Nevada Manhattan Mining Incorporated,
a Nevada corporation
/s/ Christopher D. Michaels
By:____________________________
Christopher D. Michaels, President
/s/ Jeffrey S. Kramer
By:____________________________
Jeffrey S. Kramer, Secretary
"Option Holder"
TiNV1, Inc., a California corporation
/s/ Tetsuo Kitagawa
By: ______________________
Tetsuo Kitagawa,
President and Secretary
<PAGE> 1
EXHIBIT 99.4
(NEVADA MANHATTAN MINING LETTERHEAD)
August 28, 1998
TiNVl, Inc.
701 Ocean Avenue, Suite 108
Santa Monica, CA 90402
Gentlemen:
As an inducement to TiNV1, Inc. ("TiNV1") to enter into the Subscription
Agreement dated as of August 28, 1998 ("Subscription Agreement"), whereby TiNV1
has agreed to subscribe initially for Five Million, Five Hundred Thousand
(5,500,000) shares of common stock ("Subscription Shares") of Nevada Manhattan
Mining, Inc. (the "Company") for Five Hundred Thousand Dollars ($500,000.00) in
capital, we hereby agree to the following:
1. We acknowledge and agree that a material consideration for TiNV1's execution
and delivery of the Subscription Agreement is the issuance to TiNV1 of options
to acquire 70,000,000 shares of common stock pursuant to the terms and
conditions of the Stock Option Agreement that is attached as an exhibit to the
Subscription Agreement. We further acknowledge and agree that the Stock Option
Agreement is subject to the approval of the Company's shareholders
("Shareholders' Approval") to: (a) amend this Corporation's certificate of
incorporation to increase the Company's number of authorized shares to
250,000,000, and (b) approve the Stock Option Agreement. We further acknowledge
that if the Company is unable to obtain the Shareholders' Approval, then you may
elect to rescind the Subscription Agreement or enforce the remedy described in
paragraph 2 below.
2. If the Company is unable to obtain the Shareholders' Approval within 150 days
of the date of this letter, then upon your election and your termination of your
rescission rights as provided above, both of which shall occur within 30 days of
such 150 days, the undersigneds hereby agree, without any further consideration,
to: (a) assign and transfer to TiNV1 all our respective right, title, and
interest, in and to all securities, including, but not limited to common shares
of the Company, that we directly or indirectly own ("Shares"), excluding options
to acquire the Company's securities, and (b) cancel and waive any further rights
that we have pursuant to any options to acquire the Company's securities.
<PAGE> 2
3. We represent and warrant to you that until the later of: (a) the Shareholder
Approval, or (b) our transfer of Shares to you pursuant to paragraph 2, in the
event you elect such remedy as provided above, that all of our Shares shall
remain free and clear of any lien or encumbrance, and shall not be transferred
or assigned in any manner.
4. The undersigned acknowledges and agrees that: (a) the potential transfer of
our Shares to TiNV1 and cancellation of our stock options are intended to
provide voting and other intangible benefits to TiNV1 in addition to the
economic benefit of owning the Shares if the Shareholders' Approval does not
occur, and (b) a breach of the undersigned's obligations hereunder would result
in irreparable harm to TiNV1, which would not be adequately compensated solely
by an award of money damages. The undersigned therefore agrees that TiNV1 shall
be entitled to injunctive relief to enforce specific performance of our
obligations under this agreement, and we expressly consent and agree to the
granting of such injunctive relief, and further waive any requirement for TiNV1
to post any bond or other security in connection with obtaining such injunctive
relief.
5. This Agreement shall be governed by and construed in accordance with the laws
of the State of California. If any provision of this Agreement is found by a
court of competent jurisdiction to be invalid, illegal, or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not be
affected thereby.
6. If any party to this Agreement shall commence any suit or action to interpret
or enforce this Agreement, the prevailing party in such action shall recover
such party's costs and expenses incurred in connection therewith, including
attorneys' fees.
7. This Agreement shall inure to the benefit of and be binding upon all of the
parties hereto and their respective, executors, administrators, successors and
assigns.
Sincerely,
/s/ Christopher D. Michaels
----------------------------
Christopher D. Michaels
/s/ Jeffrey S. Kramer
---------------------------
Jeffrey S. Kramer
ACKNOWLEDGED AND AGREED:
DATED: As of August 28, 1998 TiNV1, INC.
/s/ Tetsuo Kitagawa
By:___________________________
Tetsuo Kitagawa,
President and Secretary