EXHIBIT 2.2
ADDENDUM TO ACQUISITION AGREEMENT
THIS ADDENDUM TO ACQUISITION AGREEMENT (this "Addendum") is entered into
effective as of March 31, 1999, by and between LOTUS PACIFIC, INC., a Delaware
corporation ("LPFC"), and TURBONET COMMUNIATIONS, a California corporation
("TurboNet"), with reference to the following:
A. WHEREAS, LPFC and TurboNet previously entered into an Acquisition
Agreement effective as of March 15, 1999 (the "Acquisition Agreement"),
pursuant to which LPFC has agreed to purchase eighty-one percent (81%)
of the equity of TurboNet; and
B. WHEREAS, the parties desire to clarify and amend certain terms of the
Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made in this Addendum, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Structure of Transaction. On March 30, 1999, TurboNet declared a stock
dividend in the amount of four and 5/19ths shares of common stock for
each one share of common stock held (or issuable upon conversion of
preferred stock) by the TurboNet shareholders (rounded to the nearest
whole share for each shareholder). Such dividend shall be paid on such
date that TurboNet amends its articles of incorporation to authorize at
least 25,000,000 shares of common stock. On the date of the payment of
such stock dividend, pursuant to a Share Exchange Agreement, the
TurboNet shareholders will assign the dividend shares to LPFC in exchange
for 0.5364 shares of LPFC common stock for each one dividend share of
TurboNet common stock (rounded to the nearest whole share for each
TurboNet shareholder), and in consideration of LPFC's agreement to
provide TurboNet with $20,000,000 of working capital as further described
in this Addendum.
2. Preferred Stock. Within ninety (90) days from the date of this Addendum,
TurboNet intends to issue up to 800,000 shares of Series C Preferred
Stock at a price of $5.00 per share. Concurrently with such issuance
of Series C Preferred Stock, TurboNet shall issue additional dividend
shares to the Series C Preferred shareholders at the rate of four and
5/19ths shares of common stock for each one share of Series C Preferred
Stock so issued upon the agreement by each such shareholder to exchange
such shares for 0.5364 shares of common stock of LPFC. TurboNet shall
further use its good faith efforts to cause each preferred shareholder of
TurboNet to convert its shares of preferred stock into TurboNet common
stock within sixty (60) days after the issuance of such shares of Series
C Preferred Stock. LPFC hereby consents and agrees to such issuance of
Series C Preferred Stock within ninety (90) days after the date of this
Addendum, and further agrees to issue such shares of LPFC common stock
in exchange therefor.
3. Stock Options. TurboNet has issued, and expects to issue in the future,
employee stock options pursuant to its 1998 Stock Option Plan. With
respect to any shares of common stock issued pursuant to the exercise of
such options after the date hereof, TurboNet shall use its good faith
efforts to cause each optionee to assign eighty-one percent (81%) of
such shares of common stock (rounded to the nearest whole number) to
LPFC concurrently with such exercise, in exchange for 0.5364 shares of
LPFC common stock (rounded to the nearest whole number) to be issued by
LPFC to such optionee. LPFC hereby agrees to issue such shares of LPFC
common stock in connection with such exchange. Notwithstanding the
foregoing however, TurboNet shall not be obligated to cause such
optionees to assign more than 2,674,066 shares of TurboNet common stock
to LPFC, and LPFC shall not be obligated issue more than 1,434,449 shares
of LPFC common stock pursuant to this Section 3.
4. Working Capital. LPFC shall provide working capital funds to TurboNet
in the aggregate amount of Twenty Million dollars ($20,000,000) in
exchange for the issuance by TurboNet of convertible promissory notes
in the form of Exhibit A attached hereto. Such amounts shall be
advanced to TurboNet at such times as are requested in writing by the
President of TurboNet, but an aggregate of at least $10,000,000 shall be
advance to later than December 31, 1999, and all of such funds shall be
advanced no later than December 31, 2000. The promissory notes
evidencing such working capital advances shall be convertible into shares
of Series D Preferred Stock of TurboNet having such rights, preferences
and privileges as are provided in the Restated Articles of Incorporation
of TurboNet in the form attached hereto as Exhibit B.
5. Restriction of LPFC Shares. Section 4 of the Acquisition Agreement is
hereby deleted. The restrictions on the LPFC shares shall be governed by
the provisions of Section 3 of the Share Exchange Agreement(s) between
LPFC and the TurboNet shareholders.
6. Effect on Acquisition Agreement. Except as modified by this Addendum,
the terms and provisions of the Acquisition Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed and delivered this Addendum
to Acquisition Agreement effective as of the date first above written.
TURBONET COMMUNICATIONS, LOTUS PACIFIC, INC.,
A California corporation a Delaware corporation
By: /s/ Hsing Chih Tuan By: /s/ Jeremy Wang
- -------------------------- -------------------------
Name: Hsing Chih Tuan Name: Jeremy Wang
Title: President Title: President
By: /s/ Gordon Lum
- --------------------------
Name: Gordon Lum
Title: Secretary