-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BEwwduhC8TsNVqvC0eUWpyjUSSnRRMbPyBfLq1ya2nz5r4nMNX5qAJ6bjHJqdGZM fEhO+D3sOrVGLDUYFqa4IA== 0000848821-98-000027.txt : 19980917 0000848821-98-000027.hdr.sgml : 19980917 ACCESSION NUMBER: 0000848821-98-000027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980902 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980916 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TERRA NATURAL RESOURCES CORP CENTRAL INDEX KEY: 0000848821 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 880219765 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12867 FILM NUMBER: 98710535 BUSINESS ADDRESS: STREET 1: 5038 N PARKWAY STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185914400 MAIL ADDRESS: STREET 1: 5038 N PARKWAY STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: NEVADA MANHATTAN MINING INC DATE OF NAME CHANGE: 19961126 8-K 1 FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 September 2, 1998 - -------------------------------------------------------------------------------- Date of report (Date of earliest event reported) TERRA NATURAL RESOURCES CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) NEVADA - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-12867 88-0219765 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 5038 N. PARKWAY CALABASAS, SUITE #100, CALABASAS, CA 91302 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (818) 591-4400 - -------------------------------------------------------------------------------- (Issuer's Telephone Number, Including Area Code) NEVADA MANHATTAN MINING INCORPORATED - -------------------------------------------------------------------------------- (Former Name, if Changed Since Last Report) 2 Item 5. Other Events. On September 2, 1998, TiNV1, Inc., a newly-formed California corporation (the "Purchaser"), entered into a Subscription Agreement and a letter agreement, each dated as of August 28, 1998 (collectively, the "Purchase Agreements"), with Terra Natural Resources Corporation (formerly Nevada Manhattan Mining Incorporated) (the "Company") pursuant to which the Purchaser purchased 5,500,000 shares of the Company's common stock from the Company for $500,000. The Purchaser has advised the Company that the source of the funds used to purchase the stock was capital contributions. The 5,500,000 shares represents approximately 14% of the Company's presently outstanding common stock on a pro forma basis. The Purchase Agreements provide that the Company's Board of Directors will be expanded to seven and that three designees of the Purchaser will be elected to the Board of Directors. Subject to certain exceptions provided for in the Purchase Agreements, including exceptions arising on sales of the Company's common stock by the Purchaser, the Company has also agreed that three designees of the Purchaser will be included in management's slate of nominees for the Board of Directors and that the Company will use its continuing best efforts to cause such nominees to be elected to the Board. The Purchase Agreements provide that all acquisitions and divestitures by the Company which require Board Approval and any issuances of securities to the Company's debentureholders must be approved by a supermajority of the Company's directors. The Company has agreed to use its best efforts to create a class of preferred stock (the "Preferred Stock") automatically convertible into common stock on a public sale with attributes no less favorable than those comprising the shares purchased by the Purchaser. The Preferred Stock voting as a class will be entitled to elect three Directors (except as provided in the Purchase Agreements), and the Company has the right to exchange the Preferred Stock for the common stock acquired by the Purchaser. If the Purchaser's nominees are not elected to the Board of Directors in accordance with the Purchase Agreement, the Purchaser will have the right to sell any of the common stock purchased by it (or Preferred Stock issued in exchange therefor) to the Company at a price equal to the greater of the purchase price therefor and the average price established by an independent valuation by two major accounting firms. The Purchase Agreements provide that the Purchaser shall have certain other rights if its designees are not so elected in the event that the Company does not have legally sufficient funds to repurchase its stock. 3 Simultaneously with the execution of the Purchase Agreements, the Company entered into an option agreement (the "Option Agreement") with the Purchaser, which Option Agreement is subject to shareholder approval, including approval of an amendment to the Company's charter documents to increase the number of authorized shares of common stock to 250,000,000. The Option Agreement allows the optionee to purchase on or before September 1, 2005, 70,000,000 shares of the Company's common stock at a purchase price of $.335 per share. (The 70,000,000 shares, together with the 5,500,000 shares would represent approximately 69% of the Company's presently outstanding stock on a pro forma basis.) If the required shareholder approval is not obtained within 150 days of August 28, 1998, then the Option Agreement will be void. The Purchaser has advised the Company's Board of Directors that the Purchaser plans to transfer a portion of the options evidenced by the Option Agreement to Christopher Michaels and Jeffrey Kramer, the Company's two principal executive officers, to induce them to remain with the Company. While the number of options which may be transferred has not been specified, it is anticipated that it will be material. In the event the Company does not obtain the aforesaid shareholder approval within the 150 day period, the Purchaser may elect to rescind the Purchase Agreements and receive a refund of the purchase price or obtain from Messrs. Michaels and Kramer for no consideration all of the Company securities owned by them with the exception of stock options, which will then be canceled. A copy of the Purchase Agreements, the Option Agreement and the letter agreement between Messrs. Michaels and Kramer and the Purchaser are attached as exhibits to this Form 8-K. Any descriptions of such agreements are qualified in their entirety by the aforesaid exhibits, which are incorporated herein by this reference. Item 7. Financial Statements and Exhibits. (c) Exhibits Exhibit Number Reference -------------- --------- (99) Additional Exhibits Subscription Agreement dated as of August 28, 1998 Exhibit (99.1) Agreement dated as of August 28, 1998 Exhibit (99.2) Option Agreement dated as of August 28, 1998 Exhibit (99.3) Letter Agreement dated as of August 28, 1998 Exhibit (99.4) 4 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TERRA NATURAL RESOURCES CORPORATION (Registrant) Date: September 14, 1998 BY: /s/ Jeffrey S. Kramer ---------------------------------- JEFFREY S. KRAMER CHIEF FINANCIAL OFFICER 5 EXHIBIT INDEX EXHIBIT NO DESCRIPTION ---------- ----------- 99.1 Subscription Agreement dated as of August 28, 1998 99.2 Agreement dated as of August 28, 1998 99.3 Option Agreement dated as of August 28, 1998 99.4 Letter Agreement dated as of August 28, 1998 EX-99.1 2 EXHIBIT 99.1 1 EXHIBIT 99.1 SUBSCRIPTION AGREEMENT Nevada Manhattan Mining Incorporated 5038 North Parkway Calabasas Suite 100 Calabasas, California 91302 Attn: Christopher D. Michaels, President Gentlemen: This letter is delivered to you in connection with the issuance of shares of Common Stock and options to purchase Common Stock (the "Securities") of Nevada Manhattan Mining Incorporated, a Nevada corporation (the "Company"), by the Company to the undersigned ("Subscriber"), as provided in this Subscription Agreement. A. Agreements, Representations, and Warranties of Subscriber. 1. Subscription to Purchase Shares. Subject to paragraph A.2(e), the Subscriber hereby agrees to purchase the number of shares of Securities indicated on the signature page, subject to acceptance of this subscription by the Company. The Subscriber shall pay the purchase price for the Securities by delivering to the Company with this Agreement a check for the full amount of the purchase price of the Securities indicated on the signature page (the "Subscription Price"). 2. Stock Option. (a) As a material inducement to Subscriber to purchase the Securities, the Company desires to grant to Subscriber options ("Options") to purchase up to 70,000,000 shares ("Option Shares") of the Company's Securities pursuant to the terms of a Stock Option Agreement, a copy of which is attached hereto as Exhibit "A" ("Option Agreement"). The Subscription Shares, Options, and Option Shares are collectively referred to as "Subscription Shares." (b) The parties acknowledge and agree that the Company's present number of authorized shares is insufficient to cover the Option Shares, and that the Company must obtain its shareholders' approval ("Shareholders' Approval") to: (i) amend its certificate of incorporation to increase its authorized shares to 250,000,000, and (ii) enter into the Option Agreement. (c) Within forty-five (45) days of the date of this Subscription Agreement, the Company shall file proxy materials with the Securities and Exchange Commission relating to its solicitation of the Shareholders' Approval to: (i) amend this Company's certificate of incorporation to increase the number of this Company's authorized shares of common stock to 250,000,000; and (ii) approve the Option Agreement. The Company agrees, represents, and warrants that the foregoing solicitation shall be performed in accordance with applicable law governing the solicitation of shareholder votes, including, but not limited to applicable state and federal proxy rules and regulations. The Company shall use its best efforts to obtain the Shareholders' Approval. 2 (d) The Company shall immediately execute the Stock Option Agreement, provided however, that the effectiveness of the Stock Option Agreement is subject to Shareholders' Approval of the items in paragraph A.2.(c) above. (e) If the Company is unable to obtain Shareholders' Approval of the items in paragraph A.2.(c) above within 150 days of the date of this Subscription Agreement, then the Option Agreement shall be void, and subject to paragraph A.2.(f), Subscriber shall have the right to rescind this Subscription Agreement, return any Subscribed Shares to Company, and obtain a full refund of the Subscription Price ("Subscriber's Rescission Rights"). (f) The parties acknowledge that the Subscriber has entered into an agreement with Jeffrey S. Kramer and Christopher D. Michaels, who are officers and directors of this Company. Under the terms of the subject agreement, Messrs. Kramer and Michaels have agreed, among other things, that if the Company is unable to obtain the Shareholders' Approval within 150 days of the date of this letter, then in lieu of Subscriber's exercise of Subscriber's Rescission Rights that they will, without any further consideration: (a) assign and transfer to TiNV1 all their respective right, title, and interest, in and to all securities, including, but not limited to common shares of the Company, that they directly or indirectly own, excluding options to acquire the Company's securities, and (b) cancel and waive any further rights that they have pursuant to any options to acquire the Company's securities. 3. Representations, Warranties and Covenants of Subscriber. The Subscriber hereby represents and warrants to, and covenants with, the Company as follows: (a) The Subscriber has received and carefully reviewed the following materials, all of which are incorporated herein by reference ("Offering Materials") describing the Securities, the offering under which the Securities are being offered, and the business of the Company: (i) A copy of Amendment No. 2 to Form 10 filed April 3, 1997; (ii) A copy of the Company's Form 10-QSB for the quarter ending Feb. 28, 1998; 3 (iii) Press Releases dated: December 1, 1997; January 12, 1998; February 27, 1998; March 11, 1998; March 31, 1998; April 29, 1998; June 3, 1998; July 15, 1998; July 22, 1998 (2); July 30, 1998; and August 3, 1998; and (iv) Audit Confirmation prepared by U.S. Stock Transfer Corporation dated August 17, 1998, which shows stock information as of May 31, 1998. (b) The information in the Investor Questionnaire furnished to the Company by the Subscriber is complete and correct; (c) The Subscriber is an experienced investor, is capable of evaluating the merits and risks of the investment, can hold the Subscription Shares indefinitely, and has the ability to afford the complete loss of Subscriber's investment in the Subscription Shares; (d) The Subscriber has not received, and is not aware that anyone else has received, any general or public solicitation or advertisement pertaining to any offer or sale of any securities of the Company; (e) The Subscriber has received all information about the Company and the investment covered by this Agreement that the Subscriber desires and feels is necessary to enable the Subscriber to recognize and evaluate the merits and risks of the investment, and has had the opportunity to ask questions of, and receive answers from, the Company and its officers, directors and agents; (f) The Subscription Shares will be acquired by the Subscriber for the Subscriber's own account for investment and not with a view to or for sale in connection with any distribution thereof; (g) There do not currently exist any circumstances which will compel the Subscriber to sell, transfer, or otherwise distribute any of the Subscription Shares or any interest therein; and (h) All of the Subscriber's beneficial owner(s) are accredited investors as that term is defined in Regulation D under the Securities Act of 1933, as amended. 4 4. Securities Laws Matters. The Subscriber is aware of and acknowledges and agrees with the Company as follows: (a) the Subscription Shares will not be registered under the federal Securities Act of 1933, as amended (the "Act"), in reliance on the so-called "private placement" exemption provided by Regulation D promulgated thereunder and will not be registered or qualified under applicable securities laws of any state in reliance on similar exemptions; (b) The Subscription Shares, when issued, will be "restricted securities" within the meaning of Rule 144 promulgated by the Securities and Exchange Commission (the "Commission") under the Act; (c) Any person to whom any of the Subscription Shares, or any interest therein, are transferred will, in turn, be subject to applicable retransfer restrictions; (d) The Subscriber fully comprehends that the Company is relying to a material degree on the representations, warranties and agreements contained herein and with such realization authorizes the Company to act as it may see fit in full reliance hereon, including the placement on the certificates or other documents evidencing the Subscription Shares of the following legend and any legends required by any applicable state securities laws: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR TRANSFERRED UNLESS SO REGISTERED OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE. THE ISSUER MAY REQUIRE AN OPINION OF COUNSEL SKILLED IN SECURITIES MATTERS AND OTHER EVIDENCE OF COMPLIANCE WITH THE ACT PRIOR TO PERMITTING A TRANSFER OF THE SECURITIES." The Subscriber understands that the imposition of such a legend condition may limit or destroy the value, and the value as collateral, of the Subscription Shares; (e) The Subscriber agrees that none of the Subscription Shares or any interest therein will be sold, transferred or otherwise disposed of unless registered under the Act, without his having first presented to the Company or its counsel (i) a written opinion of counsel experienced in securities law matters indicating that the proposed disposition will not be in violation of any of the registration provisions of the Act and the rules and regulations promulgated thereunder, or (ii) a "no-action" letter to such effect issued by the Staff of the Commission; and (f) The Subscriber acknowledges that the foregoing is not a complete statement of the law applicable to resale of the Subscription Shares, but merely an outline of some of the more salient features. For legal advice in these matters, the Subscriber will continue to rely on its own legal counsel as the Subscriber has throughout this transaction concerning the purchase of the Subscription Shares. 5 5. Indemnification. The Subscriber hereby indemnifies and holds harmless the Company and its officers, directors, shareholders, agents, employees, attorneys, successors, and assigns from and against all damages, losses, costs, liabilities, and expenses (including costs of investigation, defense, and attorneys' fees) incurred by reason of the failure of the Subscriber to fulfill any of the Subscriber's obligations hereunder or by reason of any breach or inaccuracy of any of the representations or warranties made by the Subscriber herein. B. Agreements, Representations and Warranties of the Company. 1. Company's Representations and Warranties. As an inducement to Subscriber to execute and deliver this Subscription Agreement, the Company represents and warrants to Subscriber that: (a) The Offering Materials, and any other written disclosures made by Company to Subscriber (collectively "Offering Materials"), do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (b) The Company and its subsidiaries have been duly organized and are validly existing as corporations in good standing under the laws of the jurisdiction of their organization, with full power and authority (corporate and other) to own or lease its properties and conduct its business as described in the Offering Materials and each is duly qualified to do business and is in good standing in each jurisdiction in which the character of the business conducted by it or the location of the properties or leased by it, makes such qualification necessary, except in each case where the failure to so qualify would not have a material adverse effect on the financial condition or business prospects of the Company and/or its subsidiary; and the Company and its subsidiaries hold all material licenses, certificates and permits from governmental authorities necessary to the conduct of its business as described in the Offering Materials; (c) Upon issuance and delivery and payment therefor, in the manner described, the Subscription Shares will be, duly authorized, validly issued, fully paid and non-assessable; (d) To the best of Company's knowledge, which shall include the knowledge of the Company's officers and directors, except as described in or contemplated by the Offering Materials, there has not been any material adverse change in, or any adverse development which would materially effect the business, properties, financial condition, results of operations or prospects of the Company and its subsidiary taken as a whole from the date as of which information is given in the Offering Materials; 6 (e) To the best of Company's knowledge, which shall include the knowledge of the Company's officers and directors, except as described in the Offering Materials, there is no litigation or governmental proceeding to which the Company or its subsidiaries is a party or to which the property of the Company or its subsidiaries is subject, or which is pending, or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries which would result in any material adverse change in the financial condition, results of operations, business or prospects of the Company or which is required to be disclosed in the Offering Materials; (f) To the best of Company's knowledge, which shall include the knowledge of the Company's officers and directors, neither the Company nor its subsidiaries is in violation of any law or ordinance, governmental rule or regulation or court decree to which it may be subject which violation would have a material adverse effect on the condition (financial or other), properties, perspective results of operations or net worth of the Company and its subsidiaries taken as a whole; (g) As of May 31, 1998, the Company had 24,473,343 shares of common stock issued and outstanding, and has outstanding options for 430,000 shares. Since that date, the Company has issued: (i) 6,600,000 shares pursuant to a private placement in June and July 1998 ; and (ii) 1,500,000 shares pursuant to a stock exchange which closed in June and July 1998. In addition, the Company has obligations to issue not more than an additional 5,380,000 shares of common stock, and may have an obligation to issue additional shares under certain conditions to its debenture holders. Assuming full exercise of all options, and excluding the issuance of additional shares to its debenture holders, the Company will have issued and outstanding a total of approximately 38,383,343 shares of common stock; (h) Except as disclosed in paragraph B.1.(g), above, the Company has no commitment or obligation to issue additional shares of any class of stock or options, as of the date of this Subscription Agreement. (i) Subject to the Shareholders' Approval referenced above, the Company has the full right, power and authority to execute, deliver, perform and comply with this Agreement and has taken all other actions necessary to enable the Company to comply with the terms hereof, including, but not limited to the issuance of the Subscription Shares and the Options. This Agreement has been duly and validly executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company. 7 2. Indemnification. The Company shall indemnify, defend, and hold harmless the Subscriber, its officers, directors, shareholders, agents, employees, attorneys, successors, and assigns from and against all damages, losses, costs, liabilities, and expenses (including costs of investigation, defense, and attorneys' fees) incurred by reason of the failure of the Company to fulfill any of the Company's obligations hereunder or by reason of any breach or inaccuracy of any of the representations or warranties made by the Company herein. C. Miscellaneous. 1. Survival.The respective agreements, representations, and warranties, of the Company and Subscriber, shall survive the delivery of the Shares to the Subscriber, without limitation. 2. Arbitration. Unless the relief sought requires the exercise of the equity powers of a court of competent jurisdiction, any dispute arising in connection with the offer, sale or purchase of the Subscription Shares, the interpretation or enforcement of the provisions of this Agreement, or the application or validity thereof, shall be submitted to binding arbitration. Such arbitration proceedings shall be held in Los Angeles, California, in accordance with the rules then obtaining of the American Arbitration Association. The provisions of Sections 1282.6, 1283, and 1283.05 of the California Code of Civil Procedure apply to the arbitration. This agreement to arbitrate shall be specifically enforceable. Any award rendered in any such arbitration proceedings shall be final and binding on each of the parties hereto, and judgment may be entered thereon in any court of competent jurisdiction. 3. No Assignment. The Subscriber shall not transfer or assign this Subscription Agreement. 4. Entire Agreement. This Subscription Agreement, Stock Option Agreement, and all other written agreements relating to this Subscription Agreement and the Subscription Shares constitute the entire agreement between the Subscriber and the Company and may be amended only by a writing executed by both parties. 5. Governing Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of California. 8 6. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given on the date of service if personally served on the party to whom notice is to be given or on the third day after mailing if mailed to the party to whom notice is to be given, by first-class mail, registered or certified, postage prepaid, and properly addressed, to the Subscriber or the Company at their respective addresses set forth herein or at such other address as either party shall give for purposes of notice in accordance with the foregoing. 7. Cancellation. The Subscriber may cancel this Subscription Agreement and the offer and subscription made hereby by notice of cancellation to the Company at any time prior to the date notice of acceptance is given to the Subscriber by the Company. The Subscriber acknowledges and agrees that this Subscription Agreement shall not be binding on the Company unless and until it has been accepted by the Company at its office in Calabasas, California and that, after notice of acceptance has been given to the Subscriber, the Subscriber shall not be entitled to cancel, terminate, or revoke this Subscription Agreement or the offer and subscription made hereby or any agreements of the Subscriber hereunder, except as provided in paragraph A.2(e). 8. Attorneys' Fees. If any party commences any suit or action, including but not limited to any arbitration, arising out of or connected with this Agreement then the prevailing party(ies) shall recover his or its reasonable attorneys' fees from the non-prevailing party(ies) in addition to any other relief awarded to the prevailing party(ies). 9 NEVADA MANHATTAN MINING INCORPORATED Private Placement of Common Stock (Signature Page for Subscription by Entities) The Subscriber is (complete one): CORPORATION incorporated in State of California. PARTNERSHIP formed under laws of State of _______________________ TRUST established under laws of State of ________________________ Number of shares of the Securities subscribed for: 5,500,000 Common Stock 70,000,000 Options to Purchase Common Stock (Subject to Shareholder Approval) Subscription Price of the Securities subscribed for: $500,000.00 (Please print or type all information exactly as you wish it to appear on the Company's records) 5,500,000 shares of common stock in the name of: TiNV1 Inc. - ----------------------------------------------------------------- Name of Subscriber Federal Taxpayer I.D. No. 701 Ocean Avenue, Suite 108, Santa Monica, California - ----------------------------------------------------------------- Principal Office Address Telephone 10 The undersigned officer, partner, trustee, or other signatory certifies that he or she has full power and authority to execute this Subscription Agreement on behalf of the Subscriber or Company and that the purchase and sale of the Company has been duly authorized and is not prohibited by the governing instrument of the Subscriber or Company. DATED: As of August 28, 1998 TiNV1, INC. /s/ Tetsuo Kitagawa By:___________________________ Tetsuo Kitagawa, President and Secretary DATED: As of August 28, 1998 NEVADA MANHATTAN MINING INCORPORATED /s/ Christopher D. Michaels By:____________________________ Christopher D.Michaels, President /s/ Jeffrey S. Kramer By:____________________________ Jeffrey S. Kramer, Secretary EX-99.2 3 EXHIBIT 99.2 1 EXHIBIT 99.2 (NEVADA MANHATTAN MINING LETTERHEAD) August 28, 1998 TiNVl, Inc. 701 Ocean Avenue, Suite 108 Santa Monica, CA 90402 Gentlemen: As an inducement to TiNV1, Inc. ("TiNV1") to enter into the Subscription Agreement dated as of August 28, 1998, whereby TiNV1 has agreed to subscribe initially for Five Million, Five Hundred and Fifty Thousand (5,500,000) shares of common stock ("Subscription Shares") of Nevada Manhattan Mining, Inc. (the "Company") for Five Hundred Thousand Dollars ($500,000.00) in capital, we hereby agree to the following: 1. The Board of Directors of the Company will immediately institute the expansion of the Company's Board of Directors to a total of seven members. 2. Three designees of TiNVl will upon such expansion be elected to the Board of Directors of the Company. 3. Thereafter, three designees of TiNV1, subject to increase or decrease, as provided below, will be included in management's slate of nominees for the Board of Directors, and the Company will use its continuing best efforts to cause such nominees to be elected to the Board. The number of TiNV1's designees shall coincide with the number of directors that TiNV1 is entitled to elect pursuant to paragraph 5 below. 4. The nominees proposed by TiNV1 from time to time shall possess such qualifications, character and reputation as are reasonably appropriate for members of the Board of Directors of the Company. 2 5. The Company shall use its best efforts to create a class of preferred stock ("Preferred Stock") which possess attributes, rights, privileges, and preferences, which are no less favorable than those of the common stock comprising the Subscription Shares. Upon creation of the Preferred Stock, the Company shall have the right to exchange the common stock comprising the Subscription Shares to Preferred Stock on a one for one basis. The Preferred Stock shall be converted back into common stock in connection with any securities registration of the subject securities under the Securities Act of 1933, as amended. TiNV1 shall be the sole holder of the Preferred Stock. Subject to paragraph 6, TiNV1, as holder of the Preferred Stock, voting as a separate class, shall be entitled to elect three Directors, as long as the Company's Board of Directors consists of seven members. If the number of members of the Board of Directors increases (or decreases), then the Preferred Stock's right to elect Directors shall increase (or decrease) by one director for every increase (or decrease) of two members of the Board of Directors. For example, if the Board of Directors is increased to nine members, then TiNV1 shall have the right to elect four Directors. 6. Notwithstanding the foregoing, if TiNV1's beneficial ownership of its Subscription Shares, whether in the form of common stock or Preferred Stock drops below 2,750,000 or 1,375,000 shares, respectively, adjusted for stock dividends, merger, reorganization, reclassification, stock splits, or any other adjustment to the Company's capital structure, then the number of Directors that TiNV1 shall have a right to nominate and/or elect shall be reduced by one-third and two-thirds, respectively. TiNV1's right to nominate and/or elect Directors pursuant to paragraphs 3 and 5 shall terminate if its beneficial ownership of the Subscription Shares drops below 550,000 shares. 7. TiNV1 agrees to vote the maximum number of votes it has, per candidate, for its designated director nominees unless the voting for the election of directors is subject to cumulative voting. If TiNVl's nominees are not elected to the Board of Directors of the Company as provided in paragraphs 3 and 5, TiNV1 shall have the right for a 60-day period thereafter to put any or all of its Subscription Shares, whether common stock or Preferred Stock (collectively "Put Stock"), as the case may be, then held by it to the Company at a price, which is the greater of: (a) the purchase price therefor, or (b) the average price established by an independent valuation as of the date of the corporate action giving rise to the valuation, by two of the present "Big 5" accounting firms, or their sucessors. TiNV1 and the Company shall each appoint an accounting firm to perform a valuation of the Subscription Shares ("Put Price") within thirty (30) days of the event giving rise to the valuation. The respective accounting firms shall submit their valuations within thirty (30) days after their respective appointment. The Company shall purchase the Put Stock from TiNV1 within thirty (30) days of its receipt of the subject valuations from the accounting firms. 3 8. If the Company has insufficient legally available funds to purchase the Put Stock, then the subject 60 day period shall not commence until the Company has legally available funds to purchase the Put Stock. Further, if the Company has insufficient legally available funds to purchase the Put Stock, then at TiNV1's election, it may sell its Subscription Shares to a bona fide third party. The Company shall issue a promissory note ("Note") to TiNV1 for the difference between the Put Price and the third party sale. The unpaid principal balance shall bear interest at the rate of Bank of America's (or successor thereto) then prime rate plus 2 points. To the extent legally permissible, the unpaid principal and accrued interest thereon shall be fully amortized and paid in quarterly installments, with the first payment due and payable ninety days after the date of the subject note. To the extent legally permissible, the remaining unpaid principal and accrued interest thereon shall be due and payable on the second anniversary of the Note. The Company may prepay the balance of the note without penalty. If Company is in default under the Note, then TiNV1 shall be entitled to recover its costs from the Company, including attorneys' fees to enforce collection under the Note. 9. All acquisitions and divestitures by the Company, which require Board approval, and any issuances of securities to the Company's debenture holders, must initially be approved by 5 of the Company's 7 Directors. If the Board of Directors increases in size, then such acquisitions, divestitures, and any issuance to the debenture holders must he approved by a super majority vote of two thirds of all members of the Board of Directors, and not a super majority of a quorum of the Board of Directors. 10. The Company hereby agrees to enter into an employment agreement with Daniel Barton Pritchett of Los Angeles, California, for a period of not less than one year. Mr. Pritchett will be designated as a Vice President of Financing, with his duties to encompass the financial expansion of the Company, and such other duties as are designated by the Board of Directors. Mr. Pritchett shall receive compensation in the amount of $3,000.00 per month. 11. The Company represents and warrants to TiNV1, which shall survive without limitation, that it has the full right, power and authority to execute, deliver, perform and comply with the terms and conditions of this agreement, and that it has taken all other actions necessary to enable the Company to comply with the terms and conditions hereof. This letter agreement has been duly and validly executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company. 4 12. This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected thereby. 13. If any party to this Agreement shall commence any suit or action to interpret or enforce this Agreement, the prevailing party in such action shall recover such party's costs and expenses incurred in connection therewith, including attorneys' fees. 14. This Agreement shall inure to the benefit of and be binding upon all of the parties hereto and their respective, executors, administrators, successors and assigns. Sincerely, NEVADA MANHATTAN MINING INCORPORATED /s/ Christopher D. Michaels By:____________________________ Christopher D. Michaels, President /s/ Jeffrey S. Kramer By:____________________________ Jeffrey S. Kramer, Secretary ACKNOWLEDGED AND AGREED: as of Aug. 28th DATED: ______________, 1998 TiNV1, INC. /s/ Tetsuo Kitagawa By:____________________________ Tetsuo Kitagawa, President and Secretary EX-99.3 4 EXHIBIT 99.3 1 EXHIBIT 99.3 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR TRANSFERRED UNLESS SO REGISTERED OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE. THE ISSUER MAY REQUIRE AN OPINION OF COUNSEL SKILLED IN SECURITIES MATTERS AND OTHER EVIDENCE OF COMPLIANCE WITH THE ACT PRIOR TO PERMITTING A TRANSFER OF THE SECURITIES STOCK OPTION AGREEMENT This Stock Option Agreement ("Option Agreement"), is dated as of August 28, 1998 and is made by and between Nevada Manhattan Mining Incorporated, a Nevada corporation ("Company") and TiNV1, Inc., a California corporation ("Option Holder"). RECITALS A. The Company is concurrently issuing 5,500,000 shares of its common capital stock ("Subscription Shares") to Option Holder in a private placement pursuant to the terms of a Subscription Agreement of even date herewith. B. As an inducement to Option Holder to purchase the Subscription Shares, Company desires to grant an option to Option Holder to purchase up to an additional 70,000,000 shares of its common stock, as provided in this Option Agreement. C. The parties acknowledge that the Company's present number of authorized shares is insufficient to cover the Option Shares, and that the Company must obtain its shareholders' approval ("Shareholders' Approval") to: (i) amend its certificate of incorporation to increase its authorized shares to 250,000,000, and (ii) enter into the Option Agreement as a condition to the effectiveness of this Option Agreement. The Company intends to use its best efforts to obtain the requisite Shareholders' Approval. NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows: 1. Grant of Option. a. The Company hereby grants options ("Options") to the Option Holder to purchase up to Seventy Million (70,000,000) shares of common stock ("Option Shares") or any other replacement security of Company whether by way of reclassification, exchange, merger, consolidation, exchange, recapitalization, or other reorganization of the Company. The Options shall be evidenced solely by this Option Agreement. 2 b. This Option Agreement shall commence as of the date of this Agreement and shall terminate at 5:00 p.m., California time, on September 1, 2005 unless extended by the mutual agreement of the parties; provided however, that if the Company is unable to obtain the Shareholders' Approval, referenced above, within 150 days of the date of this Option Agreement, then this Option Agreement shall be void at the election of the Subscriber. c. Options may be exercised in full or in part by Option Holder's written notice (the "Notice") to the Company, specifying the number of shares of Option Stock to be purchased, accompanied by: (i) the payment of the exercise price ("Exercise Price") specified in paragraph 1(d) in the form of Option Holder's check made payable to Company, and (ii) such other investment representations and warranties as Company reasonably requests. Upon Company's receipt of the Notice and clearance of Option Holder's check, it shall cause delivery of share certificates, with appropriate securities legends, to the Option Holder, representing the Option Shares purchased by Option Holder. Company shall use its best efforts to immediately deposit and expedite clearing of Option Holder's check. Option Holder's purchase of Option Shares is subject to applicable securities laws. d. Exercise Price. The Exercise Price for each share of the Option Shares shall be the average of the bid and ask prices of the Company's common stock as of the close of trading on August 28, 1998. If the Company subdivides or combines its outstanding shares of common stock, by reclassification, recapitalization, reorganization, merger, or otherwise, the Exercise Price shall be proportionately decreased or increased, as the case may be. 2. Company's Agreement, Representations, and Warranties. The Company hereby agrees, represents and warrants to Option Holder, which shall survive without limitation, that: a. Subject to the Shareholders' Approval, the Company has the full right, power and authority to execute, deliver, perform and comply with this Option Agreement and has taken all other actions necessary to enable the Company to comply with the terms hereof. This Option Agreement has been duly and validly executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company; and b. Subject to the Shareholders' Approval, the Company agrees that it shall reserve sufficient shares of Common Stock to provide for Option Holder's exercise of the Options. 3 3. Indemnification. The Company shall indemnify, defend, and hold harmless the Option Holder, its officers, directors, shareholders, agents, employees, attorneys, successors, and assigns from and against all damages, losses, costs, liabilities, and expenses (including costs of investigation, defense, and attorneys' fees) incurred by reason of the failure of the Company to fulfill any of the Company's obligations hereunder or by reason of any breach or inaccuracy of any of the representations or warranties made by the Company herein. 4. Miscellaneous. a) Modifications. The parties may, by mutual consent, amend, modify, supplement and waive any right under this Option Agreement in any manner agreed by them in writing at any time. b) Applicable Law. This Option Agreement shall be governed by and construed in accordance with the laws of the state of California. c) Severability. If any provision of this Option Agreement shall be held to be invalid, illegal or unenforceable, it shall be deemed severable from the remaining provisions hereof which shall remain in full force and effect. d) Waiver. No waiver of any provision of this Option Agreement or any breach thereof shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) or any other breach hereunder nor shall such waiver constitute a continuing waiver. Either party may waive performance of any provision of this Option Agreement, the non-performance of which would otherwise constitute a breach of this Agreement, including but not limited to the non-performance of any condition precedent to such party's performance, without affecting the enforceability of this Option Agreement and the provisions contained herein. e) Successors and Assigns. The terms and conditions of this Option Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto. Option Holder may assign all or any portion of this Option Agreement and the Option Securities to any party without the Company's prior written consent, subject to compliance with applicable laws, including, but not limited to federal and state securities laws. 4 f) Attorneys' Fees. If any legal action is instituted to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to actual attorneys' fees in addition to any other relief to which that party may be entitled. IN WITNESS WHEREOF, the parties have executed this instrument as of the date first above written: "COMPANY" Nevada Manhattan Mining Incorporated, a Nevada corporation /s/ Christopher D. Michaels By:____________________________ Christopher D. Michaels, President /s/ Jeffrey S. Kramer By:____________________________ Jeffrey S. Kramer, Secretary "Option Holder" TiNV1, Inc., a California corporation /s/ Tetsuo Kitagawa By: ______________________ Tetsuo Kitagawa, President and Secretary EX-99.4 5 EXHIBIT 99.4 1 EXHIBIT 99.4 (NEVADA MANHATTAN MINING LETTERHEAD) August 28, 1998 TiNVl, Inc. 701 Ocean Avenue, Suite 108 Santa Monica, CA 90402 Gentlemen: As an inducement to TiNV1, Inc. ("TiNV1") to enter into the Subscription Agreement dated as of August 28, 1998 ("Subscription Agreement"), whereby TiNV1 has agreed to subscribe initially for Five Million, Five Hundred Thousand (5,500,000) shares of common stock ("Subscription Shares") of Nevada Manhattan Mining, Inc. (the "Company") for Five Hundred Thousand Dollars ($500,000.00) in capital, we hereby agree to the following: 1. We acknowledge and agree that a material consideration for TiNV1's execution and delivery of the Subscription Agreement is the issuance to TiNV1 of options to acquire 70,000,000 shares of common stock pursuant to the terms and conditions of the Stock Option Agreement that is attached as an exhibit to the Subscription Agreement. We further acknowledge and agree that the Stock Option Agreement is subject to the approval of the Company's shareholders ("Shareholders' Approval") to: (a) amend this Corporation's certificate of incorporation to increase the Company's number of authorized shares to 250,000,000, and (b) approve the Stock Option Agreement. We further acknowledge that if the Company is unable to obtain the Shareholders' Approval, then you may elect to rescind the Subscription Agreement or enforce the remedy described in paragraph 2 below. 2. If the Company is unable to obtain the Shareholders' Approval within 150 days of the date of this letter, then upon your election and your termination of your rescission rights as provided above, both of which shall occur within 30 days of such 150 days, the undersigneds hereby agree, without any further consideration, to: (a) assign and transfer to TiNV1 all our respective right, title, and interest, in and to all securities, including, but not limited to common shares of the Company, that we directly or indirectly own ("Shares"), excluding options to acquire the Company's securities, and (b) cancel and waive any further rights that we have pursuant to any options to acquire the Company's securities. 2 3. We represent and warrant to you that until the later of: (a) the Shareholder Approval, or (b) our transfer of Shares to you pursuant to paragraph 2, in the event you elect such remedy as provided above, that all of our Shares shall remain free and clear of any lien or encumbrance, and shall not be transferred or assigned in any manner. 4. The undersigned acknowledges and agrees that: (a) the potential transfer of our Shares to TiNV1 and cancellation of our stock options are intended to provide voting and other intangible benefits to TiNV1 in addition to the economic benefit of owning the Shares if the Shareholders' Approval does not occur, and (b) a breach of the undersigned's obligations hereunder would result in irreparable harm to TiNV1, which would not be adequately compensated solely by an award of money damages. The undersigned therefore agrees that TiNV1 shall be entitled to injunctive relief to enforce specific performance of our obligations under this agreement, and we expressly consent and agree to the granting of such injunctive relief, and further waive any requirement for TiNV1 to post any bond or other security in connection with obtaining such injunctive relief. 5. This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected thereby. 6. If any party to this Agreement shall commence any suit or action to interpret or enforce this Agreement, the prevailing party in such action shall recover such party's costs and expenses incurred in connection therewith, including attorneys' fees. 7. This Agreement shall inure to the benefit of and be binding upon all of the parties hereto and their respective, executors, administrators, successors and assigns. Sincerely, /s/ Christopher D. Michaels ---------------------------- Christopher D. Michaels /s/ Jeffrey S. Kramer --------------------------- Jeffrey S. Kramer ACKNOWLEDGED AND AGREED: DATED: As of August 28, 1998 TiNV1, INC. /s/ Tetsuo Kitagawa By:___________________________ Tetsuo Kitagawa, President and Secretary -----END PRIVACY-ENHANCED MESSAGE-----