EX-10.99(H)(1) 8 a2045876zex-10_99h1.htm EX-10.99(H)(1) Prepared by MERRILL CORPORATION www.edgaradvantage.com
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EXHIBIT 10.99(h)(1)


FASTVOICE
TERM SHEET

    This Term Sheet is an outline of the basic terms of our proposal. It is a commitment subject to the completion of due diligence, approval by our investment committee and the execution and delivery of final documentation satisfactory to all parties.

OCTOBER 31, 2000

Company:   FastVoice ("Borrower" or "Company")

Lenders:
 
Zilkha Venture Partners, L.P. ("ZVP"), and other Participants (collectively "Lenders")

Facility:
 
Up to $1,500,000 bridge loan payable as follows:

 
 
 
 
a) ZVP to fund $300,000 on Closing Date

 
 
 
 
b) ZVP with option to fund $200,000 on the following schedule: (i) $100,000 on December 1, 2000 and (ii) $100,000 on January 5, 2001.

 
 
 
 
c) Other Participants to fund $200,000 on Closing Date, or at their option to commit on or before Closing Date to exercise any existing subscription agreements, warrants or options (as the case may be) to purchase Common Stock for the aggregate price of not less than $200,000; provided that such commitment to exercise shall be closed not later than November 14, 2000, and

 
 
 
 
d) Other Participants with option to fund (i) $400,000 on December 1, 2000 and (ii) $400,000 on January 5, 2001.

Closing Date:
 
On or before November 7, 2000

Due Diligence:
 
ZVP to conduct and complete due diligence, reasonably satisfactory to ZVP, by (i) December 1, 2000 for purposes of exercising its option to fund the second and third tranches of the bridge loan and (ii) January 31, 2001 for purposes of submitting a term sheet to lead the Next Round (defined below)

Repayment in Cash
or by Exchange:
 
At the Maturity Date the outstanding principal and accrued interest of the Notes (the "Debt"), the Borrower shall repay the Debt to the Lenders by exchanging the Debt for a number of Series A Convertible Preferred ("Series A") shares (or, if no Series A shares are offered, an equivalent number of other equity securities offered) which number shall equal the quotient of i) the Debt, divided by ii) the product of the lowest price per share for which shares are sold at the Next Round times .80 (the "conversion formula"). In the event ZVP does not lead the Next Round and the Next Round does not close on or before July 1, 2001, ZVP at its option may require that the Debt be repaid in immediately available funds pursuant to the terms of the Note.

Interest Rate:
 
Eleven percent (11%) per annum, compounded daily, based upon a 360-day year.

Senior Notes:
 
Promissory Notes to be senior to all future debt and all other existing unsecured or unencumbered debt obligations (the "Notes").

Maturity Date:
 
The earlier of July 1, 2001, or upon closing of the Next Round.

 
 
 
 
 

1


Extension:
 
At the Borrower's option, the Maturity Date may be extended for a period of 30 days; provided, however, in the event of any such extension, the multiplier in the conversion formula shall be decreased from ".80" to ".72."

Collateral:
 
Lenders shall have a first priority security interest in all unencumbered personal property and assets of Borrower, including intellectual property, see Exhibit A hereto

Equity:
 
For a period of 30 days after the opening of the Next Round, Lenders shall have the right to purchase up to 50% of the Series A shares (or such other equity securities), which are offered for sale by the Company in the next round of financing in which Borrower receives at least $5,000,000 ("Next Round").

Liquidity Event:
 
In the event of a Liquidity Event prior to the Next Round, Lenders shall have the right to convert the Notes to common stock on the same basis as the conversion formula and participate in the Liquidity Event, or at Lenders' option, accelerate the Note and require Borrower to repay the Debt. For purposes hereof, Liquidity Event shall include a merger, consolidation, sale, disposition, dissolution or related transaction resulting in a sale of all or substantially all of the stock or assets of the Borrower.

Closing Conditions:
 
On or before the Closing Date, each person with a right to purchase securities in the Company, whether such right arises from a subscription agreement or other instrument (including a certain Common Stock Purchase Right Agreement, dated as of January, 2000 (the "Rights Agreement")) shall have exercised, committed to exercise or waived such right. For purposes of the initial funding of the Facility by "other Participants," any exercise pursuant to the preceding sentence shall be applied toward the initial $200,000 tranche. In addition, on or before the Closing Date each such person shall indicate their understanding that any waiver of one's right under any such subscription agreement, pre-emptive right or related anti-dilution protection, including the Rights Agreement, shall constitute a waiver of such person's right to participate in the Next Round on a preferential pre-emptive basis.

Financial Covenants:
 
None.

Reporting:
 
Monthly financials within 25 days, FYE audited and unqualified opinion within 180 days. Other reports on request.

Documentation:
 
Lender's standard documents, including: conditions to advances, representations and warranties on company status, legal compliance, liens, legal compliance; covenants on investments, liens, debt, dispositions, insurance; remedies, jury waiver and WA law.

Expenses:
 
Company to reimburse ZVP.

Confidentiality:
 
This Term Sheet is confidential and proprietary to Lenders. Please treat it with the same respect that we treat your private information and do not disclose it to any third parties.

[Remainder of this Page is Intentionally Left Blank]

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To confirm your agreement with these basic terms, please fax a signed copy of this Term Sheet to our office.

Zilkha Venture Partners L.P.        

By: 
 
/s/ [ILLEGIBLE]
Its: General Partner
 
 
 
 
Date:    October 31, 2000   Agreed and confirmed:

 
 
 
 
FASTVOICE.COM

 
 
 
 
By: 
 
/s/ [ILLEGIBLE]
        Title:    President
        Date:    Nov. 3, 2000

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EXHIBIT A


Schedule of Unsecured Assets

     See attached schedule. Does not include intellectual property.

4


FastVoice.com
Assets by Category

Asset Category
   Barcode
#
   Asset Description
   Serial Number
   Date
Acquired
   Purchase Price
   Location
Software                        
    76   Visio 2000 Ent CD   SHP 123165   14-Mar-2000   992.21   Seattle
    75   CDW Software—Adobe Photoshop, Visio 2000, Adobe Illustrator   HS45PE-0197634820   19-Jan-2000   1,141.42   Seattle
    74   TOAD Debugger Software   NVTBPSU01   21-Jul-2000   2,067.64   Seattle
    46   Veritas Media/Documentation Kit & netbackup shared storage option   SLNSS115000   5-Jun-2000   6,914.34   SD
    71   Together/Solo   SOLO   13-Sep-2000   7,797.48   Seattle
    70   Toplink JAVA   10140   25-Sep-2000   19,792.35   Seattle
Laptops                        
    16   Fijitsu - E5140   R9Y01190   22-Dec-1999   1,840.77   Seattle
    17   Fijitsu - E5140   R9Y04048   22-Dec-1999   1,840.77   Seattle
    22   HP Omnibook Laptop   TW01010262   14-Mar-2000   2,168.18   Seattle
    24   Dell Inspirion 6000   9003WCC1FC68   15-Mar-2000   4,127.93   Seattle
    23   Dell Inspirion 5000   9003WCC1FC68   15-Mar-2000   4,127.94   Seattle
    1   Dell Inspirion 7500 (Y1GXN)   0009963T129619BH1632   3-Jan-2000   4,272.31   Seattle
    2   Dell Inspirion 7500   57155479-Y1GXP   3-Jan-2000   4,272.32   Seattle
    61   Boxlight Projector   2400X0-9M   5-Jun-2000   6,038.70   Seattle
Servers                        
    11   Hard Drives   7BV00EJS   22-Mar-2000   469.15   Seattle
    10   Hard Drive   7BV00RGS   22-Mar-2000   469.15   Seattle
    9   Exchange Server       16-Dec-1999   480.00   SD
    39   Color Frame Buffer   N/A   6-Apr-2000   690.69   SD
    8   File Server (Odd-Job)   Clone   16-Dec-1999   802.56   Seattle
    40   APC Smart 1400 RM UPS   N/A   11-Apr-2000   828.97   Seattle
    61   Ultra SCSI   Sg-XDSK010C-9G   30-Jun-2000   978.49   Seattle
    28   Switches for Servers   ALA20049   8-Apr-2000   1,046.66   SD
    14   Web Server   Clone   13-Jan-2000   1,283.02   Seattle
    47   Sun Switches       28-Apr-2000   2,293.82   SD
    35   AG 4000/800 2T1/E1 BD Licence 48 Ports   311931   25-Apr-2000   3,226.50   SD
    10   Sun Enterprise Ultra 5 Server   FW95210356   6-Jan-2000   3,910.68   Seattle
    55   HP LPR Rack Mounting Server   VS02316326   12-Jul-2000   5,483.46   Seattle
    11   Sun Enterprise Ultra 5 Server   FW95210292   6-Jan-2000   3,910.69   Seattle

5


FastVoice.com
Assets By Category

Asset Category
   Barcode
#
   Asset Description
   Serial Number
   Date Acquired
   Purchase Price
   Location
    78   Telephony Board T1 48 port PCI   AG4000DT   7-Apr-2000   19,023.00   SD
    77   Redundant MM7 server hardware platform   SS7SRVRT1   7-Apr-2000   105,400.00   SD
Networking Equipment                        
    37   HP Procurve 2224 24 Port   STW94320824   31-Mar-2000   720.49   Seattle
    15   Watchguard Firebox II Security System   3008443   16-Dec-1999   3,650.61   Seattle
Office Equip/Rack Shelves                        
    38   Netshelter Shelfs   N/A   4-Apr-2000   1,302.30   SD
    29   Surgearrest Rackmount w/Fan       27-Mar-2000   1,349.16   SD
    26   Rack Base Cabinet       1-Apr-2000   1,419.00   SD
    32   Netshelter Cabinet w/Vent       14-Apr-2000   1,440.80   SD
    45   Toshiba Speakerphones       8-June-2000   1,597.88   Seattle
    60   Movincool Classic 14   6990008140   21-Aug-2000   1,873.90   Seattle
    25   LCD Rack Mount Display, kbd and Touchpad   STL0003FR-145   7-Apr-2000   2,310.94   SD
    48   Quick Silver Rack & Shelves       18-Apr-2000   2,348.48   SD
    36   Netserver Rack Mount System   SMF-9101389   6-Apr-2000   2,513.03   Seattle
    64   Cow Sofa & Chair   N/A   25-Aug-2000   2,733.75   Seattle
    66   Office Units for workstations   N/A   23-Aug-2000   5,000.00   Seattle
    27   Netshelter Cabinet       6-Apr-2000   5,494.07   SD
    34   9176 Cabinet w/mounting kit   N/A   26-Apr-2000   9,426.48   SD
    65   IKEA Furniture   N/A   12-Sep-2000   15,605.10   Seattle
    33   Misc Assets From Grant Norwitz   N/A   1-Dec-1999   30,780.62   Seattle
    80   Industrial Rack Mount PC (Dual Processor) with 16 Quick Connect slots   PCXXX   7-Apr-2000   51,506.84   SD
Computers                        
    42   Computer       6-Jun-2000   664.09   Seattle
    12   Workstation - 012 (Contract Use)   Clone   4-Dec-1999   944.92   Seattle
    4   Workstation - 004   Clone   29-Nov-1999   1,045.81   Seattle
    7   Workstation - 007   Clone   29-Nov-1999   1,045.82   Seattle
    6   Workstation - 006   Clone   29-Nov-1999   1,045.82   Seattle
    5   Workstation - 005   Clone   29-Nov-1999   1,045.82   Seattle
    21   Workstation - 014 (Contract Use)   Clone   8-Mar-2000   1,122.92   Seattle
    72   Computer Parts and Components       22-Sep-2000   1,225.01   Seattle
    54   Computer - Workstation       11-Jul-2000   1,303.20   Seattle
    30   Apple IMAC DV   SXB0132Y7HSE   14-Apr-2000   1,334.69   Seattle
    13   Workstation - 013   Clone   24-Jan-2000   1,362.93   Seattle
    52   Computer - Workstation       17-Jul-2000   1,374.87   Seattle
    53   Computer - Workstation       17-Jul-2000   1,374.88   Seattle

6


FastVoice.com
Assets By Category

Asset Category
   Barcode
#
   Asset Description
   Serial Number
   Date Acquired
   Purchase Price
   Location
    58   18 GB Hard Drive   50337052   26-Jun-2000     1,441.23   Seattle
    57   18GB Hard Drive   50337173   26-Jun-2000     1,441.23   Seattle
    31   Apple PM G4   SXB0132Y7HSE   14-Apr-2000     1,627.92   Seattle
    41   Computer       23-May-2000     1,641.49   Seattle
    49   Computer Workstion       30-Jun-2000     1,943.93   Seattle
    63   Dell - Dimension 4100 Series   60CH001   16-Aug-2000     3,508.87   Seattle
    68   Dell - Dimension 4100   50CH001   16-Aug-2000     3,508.87   Seattle
    44   Dell - Dimension XPS B Series       12-Jun-2000     3,547.99   Seattle
    43   Dell - Dimension XPS B Series       12-Jun-2000     3,547.99   Seattle
    59   Toshiba Tecra 8100   70785354U   8-Aug-2000     4,324.90   Seattle
    58   Presentation LapTop   264781U   17-Jul-2000     4,355.11   Seattle
    62   Sun Ultra 10   PR05168332   30-Aug-2000     7,274.73   Seattle
Printer                          
    18   Hewlett Packard - Laser Jet Printer 4   USBB032197   16-Dec-1999     360.00   Seattle
    20   Hewlett Packard Printer   SG762120HY   16-Dec-1999     499.00   Seattle
    3   QMS SC-200 Digital Copier/Scanner   90901444-QMSUSA   22-Nov-1999     388.00   Seattle
    3   QMS Magicolor 6100 DP, 384MB 12PPM Color - 24PPM Blk/Wht 1200DPI   Q0194843   22-Nov-1999     8,250.50   Seattle
    19   Canon Copier   CNP408012345?   16-Dec-1999     18,661.00   Seattle
License                          
    79   MasterVox, Host-Base Text-to-Speech   MVRU3-98   7-Apr-2000     158,732.00   SD
    81   Veritas Licenses & Oracle   OR-03065V801   31-Mar-2000     337,650.50   SD
Intellectual Properties                          
Total                   $ 986,300.70    

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QuickLinks

FASTVOICE TERM SHEET
EXHIBIT A
Schedule of Unsecured Assets
FastVoice.com Assets by Category
FastVoice.com Assets By Category
FastVoice.com Assets By Category