Relationship with EarlyBirdCapital, Inc.
EarlyBirdCapital (formerly known as Southeast Research Partners), acted as placement agent in the August 2000 Private Placement, for which it received an 8% commission and a 2% non-accountable expense allowance. In connection with the August 2000 Private Placement, we also issued to EBC the Purchase Option, which permits the holder to purchase 52,800 shares of common stock and Warrants to purchase 52,800 shares of common stock. Two-tenths of a share of common stock and one Warrant is issuable together as a unit, although no separate unit certificates will be issued. Each unit can be purchased at a price of $10.625 per unit. We also granted to EBC a 30-day right of first refusal to underwrite or place future offerings for which we engage the services of an investment banker exercisable until August 2003. In addition, we have agreed until August 2003 to either appoint to our Board a person designated by EBC or to permit EBC to send a representative to observe each meeting of the Board. No person has been designated by EBC for appointment to our Board. We will also pay "source fees" to EBC, until August 2002, if EBC introduces potential investors to us and those investors make subsequent investments in us.
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EBC also acted as an underwriter and the representative of our June 1999 public offering of 2,300,000 units, for which it received underwriting discounts and commissions of approximately $1,380,000. We also paid EBC a non-accountable expense allowance of $517,500. In addition, in connection with the June 1999 public offering, we sold to certain affiliates of EBC, for an aggregate of $100, purchase options to purchase 200,000 units (each unit consisted of six tents of one share shares of our common stock and two Public Warrants), comprised of 120,000 shares of common stock and 400,000 redeemable common stock purchase warrants, with an initial exercise price of $12.375 per unit. Those purchase options are exercisable during a period that began on June 15, 2000 and ends on June 15, 2004. The warrants issuable upon exercise of these purchase options are the same as our Public Warrants, except that the initial exercise price of the Public Warrants included in the purchase options is $33.00 per share of common stock. In addition, under the terms of the underwriting agreement entered into in connection with the June 1999 public offering, we agreed to use our best efforts to appoint or elect a designee of EBC as a member of our Board for a period of three years beginning June 15, 1999. Our Board nominated Ms. Cheryl Snyder as a nominee for election to our Board, and at our Annual Meeting of Stockholders held in 1999, she was elected as a director to serve for a term expiring in 2002. Ms. Snyder served in that capacity until September 2000.
In connection with the June 1999 public offering, we also engaged EBC, on a non-exclusive basis, to act as our agent for the solicitation of the exercise of our Public Warrants. To the extent not inconsistent with the guidelines of the National Association of Securities Dealers, Inc., and the rules and regulations of the SEC, we have agreed to pay EBC for bona fide services rendered a commission of 5% of the exercise price of each Public Warrant exercised after one year from June 15, 1999. In addition to soliciting, either orally or in writing, the exercise of the Public Warrants, such services may also include disseminating information, either orally or in writing, to warrant holders about us or the market for our securities and assisting in the processing of the exercise of the Public Warrants. EBC agreed to forgo any solicitation fee with respect to the Warrants and the Extra Warrants registered pursuant to the registration statement filed by VNCI relating to the securities issued in connection with the August 2000 Private Placement.
EBC also acted as one of the placement agents for our February 1999 private placement of securities, for which it received aggregate commissions of $228,000 and a non-accountable expense allowance of $85,500.
On December 14, 2000, the Company sold 250,000 shares of its B2BVideo Network equity investment to Dalewood 2 for $2.00 per share or $500,000. Dalewood 2 is a venture fund that is directed and controlled by EBC.
Mr. David Nussbaum, one of our 5% or greater stockholders, is an officer and director of EBC. Mr. Nussbaum, together with Mr. Robert Gladstone and Mr. Roger Gladstone, who are also 5% or greater stockholders of the Company, are each minority stockholders of Firebrand Financial Group, Inc. (formerly Research Partners International, Inc.) ("Firebrand"), which is the majority stockholder of the parent company of EBC. Mr. Nussbaum and Mr. Roger Gladstone are also directors of Firebrand.
Bridge Notes & Warrants
In September 2001, Dalewood Associates, L.P., an affiliate of EBC, loaned the Company $250,000, part of the Company's First Bridge Secured Notes on which the outstanding principal, and interest at the rate of 9% per annum, are due and payable on the earlier of February 15, 2002, or the date on which a financing closes. The First Bridge Secured Notes are secured by substantially all of our intellectual property, including our United States patents and trademarks. In conjunction with this loan, the Company issued warrants to purchase 150,000 shares of common stock at an exercise price of $2.00 per share
In October 2001, K.B.C.I. Nominees Limited., an affiliate of EBC, loaned the Company $200,000, part of the Company's First Bridge Secured Notes on which the outstanding principal, and interest at the rate of 9% per annum, are due and payable on the earlier of February 15, 2002, or the date on which a financing closes. The First Bridge Secured Notes are secured by substantially all of our intellectual property, including our United States patents and trademarks. In conjunction with this loan, the Company issued warrants to purchase 120,000 shares of common stock at an exercise price of $2.00 per share
In November 2001, K.B.C.I. Nominees Limited., an affiliate of EBC, loaned the Company $250,000, and Dalewood Associates, an affiliate of EBC, loaned the Company $250,000, all as part of the Company's Second Bridge Unsecured Notes on which the outstanding principal, and interest at the rate of 9% per annum, are due and payable on the earlier of February 19, 2002, or the date on which a financing closes. In conjunction with these loans, the Company issued warrants to purchase 200,000 shares of common stock at an exercise price of $2.75 per share |
