First off: Some of our own questions for you and then some answers.
MSB.
We create and file mounds of DD notes based on the scrubbing of our picks. We were able to gain access to certain information during our visits to the company this summer. We have read all the THW related posts on SI again in the past week and we have a question for you.
Are you not the same person that posted e-mail messages that you received from the THW CEO back on August 18 to Silicon Investor? We are quite curious because one of our group members seems to recall that you posted e-mail messages from the company that created some problems with other investors.
Please enlighten us on this?
Our discussions and DD with the company have identified that some SI posters tried to cause some trouble back for THW in August around the 18th.
We have names in our notes: MSB came up in our notes as well as others: We keep excellent notes and records on everything.
Do you know a D. Wilson?
Do you know a t. collins?
However, that is another matter.
So here are the answers you asked for.
To: VentureCap (746 )
From: MSB Tuesday, Oct 20 1998 1:03AM ET
Reply # of 749
I read your first post on the newest THW thread, and there were a few things which piqued my curiosity.
exchange2000.com
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Paragraph 1: "....and why we are introducing them to our other readers..."
Your other readers? Who might they be and in what manner do you communicate with them?
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Our other readers are: Since you are one of the SI readers, then the other readers are those in our executive investment group. Most do not or will not spend the time to read what is posted on Silicon Investor. Membership and time issues. They are not that interested in the small stuff. It is a requirement that everyone in the executive group gets access to all communication and correspondence on our investment picks.
We are 12 executive level investors (CEO's, COOs, VP's, CFO's or successful executives) from the Silicon Valley, CA, Auston, Texas Texas, and Boston Cambridge, Mass area. We have been investing in software ventures for many years as group. Ten are still active executives, and 2 are former CEOs and now just board members and semi retired. There used to be 15 in the group." Thw is just one of our many investments and we are not fully invested. We have just made an initial market investment. Other plans are in order, but we will not discuss those plans.
We communicate by private e-mail to the whole group. All members read everything that is posted or gathered on companies in scrubbing process. This post was a condensed version of a more detailed document that we have already sent to the executive group. Most of our information is confidential and is not sent out or distributed to any outside individual. An exception is the recent post that was cut and pasted from our scrubbing notes, with certain confidential information removed. We have signed a NDA with THW, so we have to be careful.
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Paragraph 8: "Keep in mind that we are not the only group that believes in THW or is writing about them, or assisting them. There are two other reputable groups that are trying their best to help THW..."
And the names of those two groups would be? Come to think of it, does your group have a specific name?
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"We have been in discussions with 2 other reputable groups. We had these discussions with them recently because we obviously have the same goals. The company seems to be dealing pretty close to the chest about how many groups they are in discussions with, so there could be more groups that we don't know about.
We now know of 4 groups now as of yesterday (our group and 3 others). We have introduced THW to a number of groups and industry people and financial people in the past 40 days. There was no connection with one of the groups mentioned other than our recent conference calls with them. They are from the Chicago area and Eastern Canadian area and another group is from the Sand Hill Road area in the Silicon Valley. Since the post, we have found out that a new group from San Diego, CA has taken an interest in THW. The sophisticated investment community hears about things quickly. We expect more throughout the fall.
You can refer to our group as the High Tech Executive Angel Group. I can't speak for the other groups. We only know some of them by their real names. Doing a search on the HT Executive Angel Group will bring up nothing of interest because we don't have a formal name. Consider us a band of executive angel investors or early stage investors. We are not VCs, since we all have full time responsibilities (except 2 semi retired members) with our own ventures. Each member knows each other personally, but to outsiders we prefer to remain anonymous and you are an outsider. We have many conference call discussions, communicate through e-mail extensively and meet formally in person 3 times a year. Once in Las Vegas at Comdex. Once at an Eastern Seybold Conference. And once in St. Kitts.
C-1) LEADERSHIP - Paragraph 7:
"McCallum is proud that he has made everyone understand that they are
their to build value for the shareholders and that the reward for these employees and management will happen when the company delivers for the shareholders. Rajiv Aggarwal obviously didn't fit this category and mold and he is gone. All of THW employees have chosen to earn less for an opportunity to work at the company and all have been given an escrow performance equity position by the co-founders, and all of this equity has come from the co-founders original equity stake from 1995."
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I was under the impression that the employees would be getting performance shares once they had met certain goals and once the stock price was at a certain price level (.90 I believe).
Have those shares already been distributed, or are you speaking of some different shares?
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You seem a little confused in this area.
This information is easily gathered with a phone call to the company and a check back on THW press releases.
The co-founders have made 1,488,000 of their escrow performance shares available to 6 key employees. These were bought back from Aggarwal at the end of August. They are escrow performance and can not trade unless the company meets certain positive cash flow targets. Investors won't see these being released or sold for some time.
These escrow shares have 2 sets of performance criteria: The ASE criteria and also performance measures decided by the co-founders. The co-founders want to make sure that these employees stay with THW for 3 or 4 years to perform. So they put a second set of performance criteria on the escrow shares. This can be removed by McCallum only if the company performs for shareholders and meets the cash flow targets and only if the co-founder group votes in favor of the release.
The 90 cent shares that you mentioned are the 90 cent stock options that were granted to other employees. No management or co-founders have been granted any of these stock options. In fact, our notes have it that the co-founders cancelled about 970,000 management and employee stock options about a year ago. Since these are 90 cent options, they will have no impact on the market and no employee would want to sell them unless THW was trading well above $2.00. They only get this option for 2 to 3 years so they won't exercise them for 30 cents or anything.
The company has done an excellent job to make sure the employee incentives and rewards are in place, but they also have made certain that the shareholders are protected from any insider or employee share releases in the future. They have created a very good balanced incentive plan which makes people like us very pleased.
I suggest that you call the company. Spend a dime. You should not just rely on our information to gather your facts. We are not perfect.
I hope this answers your questions MSB.
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