Exhibit 10.1
AGREEMENT TERMS
This agreement term sheet, between Vermont Research Products Inc., "Vermont" and
CharCom, Inc., "Char", is intended to outline the terms and conditions of
converting approximately $1,995,774 from a trade payable plus $54,226 interest
all owed and acknowledged by Char to Vermont to a combination of $1,300,000
preferred stock and $750,000 convertible debenture.
Preferred Stock
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. Preferred stock cumulative 6% dividend in preferred stock with pro ration
for partial quarters.
. Stock to be registered on or before March 15, 1998.
. Conversion Price - $1,375 (Stated Price).
. Liquidation value is defined as stated price plus accrued dividends.
. Anti Dilution - If the price per share of common stock at the time of
conversion is less than $1,375, the company will adjust the amount of
shares by that difference. In no event will the price be adjusted below
$1.15 Holder will give five days notice of intent to convert.
. After 18 months or unless mutually agreed to an earlier date, buy back
option by issuer upon 15 days notice of intent to redeem in cash. Buy back
option terminates upon holder's conversion to common stock. Buy back is
calculated at 105% of the stated price. If called for buy back, holder has
right of immediate conversion to common stock in lieu of tendering for
redemption.
Other Features
Except as to Series E as to it's conversion to common stock and stated
accrued dividends, as long as Series F preferred stock (to be issued
to Vermont) is outstanding, company will not pay cash dividends,
redeem stock either common or preferred or make any other cash
disbursements related to stock.
Liquidation Rights
Preference stock would be entitled to, after trade creditors and
debenture holder, Vermont of equal preference with Series E preferred
stockholders over common stock shareholders in the event of
reorganization whether voluntary or involuntary. Should the company
issue additional series of Preferred Stock, Vermont has preference
pertaining only to liquidation.
Debenture
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Convertible Debenture coupon prime rate, variable. The conversion to common
stock shall be calculated based upon $1,375 with the same dilution protection as
Series F Preferred. Debenture shall be secured by all foreign accounts
receivable except those specifically designated as North American. Payments on
the basis of 40% to Vermont and 60% to Chat from all receivables except those of
North American origin, until the total amount of debenture is satisfied. Upon
partial or full redemption, a proportional amount of the per share conversion
features will also terminate by that amount of dollar reduction divided by the
$1,375 conversion price. Example: $150,000 payment divided by $1,375 = 109,091
shares, conversion feature retired.
Debenture is to be further reduced by collections from Canadian Account
receivables by payment to for actual product shipment amounts made by Vermont to
ChatCom.
Merge or Sale of Company (Organic Change)
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Vermont has right of conversion to common stock or redemption at the stated
price plus accrued dividends of Preferred Stock by the company or its successor.
Additional Debts or Equity Offerings
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Prior to conversion of Preferred Stock, the holder shall have the right of
approval, not unreasonably withheld, of any debt offering, except commercial
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bank line of credit or asset lending against North American accounts receivable
and furnished or assembled goods inventory or any Preferred Stock offering that
would have liquidation preference before Vermont.
Final documentation to be completed prior to November 19, 1997.
Agreed by: /s/ A.C. Lubash Date: September 30, 1997
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A.C. Lubash, Director
ChatCom, Inc.
Agreed by: /s/ Date: September 30, 1997
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Vermont Research Products, Inc.