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EX-10.(r)
LBC Capital Resources, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
TEL: 000-000-0000
FAX: 000-000-0000
October 17, 1996
EDnet
Xxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxxxxx
Chairman and Chief Executive Officer
This letter confirms the agreement ("Agreement") by EDnet, Inc. or its
affiliates (the "Company") to retain LBC Capital Resources, Inc. ("LBC") to
provide the services described below.
1. Services. The following summarizes the services to be provided by LBC:
1.1 Screen and advise the Company with regard to corporations,
individuals, mutual funds, hedge funds, investment partnerships, securities
firms, lending and other institutions, their referrals and affiliates, which,
for their own account or for their clients, customers or investors (collectively
"Entities"), may provide a transaction to the Company.
1.2 Any services provided by LBC under this Agreement shall be at LBC's
sole cost and risk. LBC's sole compensation, if any, shall be a "success fee"
upon consummation of a transaction by entities ("Entities") for the purpose of
effecting such a transaction (hereinafter, a "Transaction"), as provided in
Section 4 below.
2. Term.
2.1 This Agreement will be effective upon signing by both parties and
shall be in effect for a minimum term of 60 days. Thereafter the Agreement will
remain in effect until terminated by either party upon 10 days written notice.
3. Information.
3.1 In connection with performing its services hereunder, LBC will be
provided with such information regarding the Company and its operations as LBC
shall reasonably request.
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October 17, 1996
4. Success Fee to LBC.
4.1 LBC shall receive a success fee ("LBC's Fee"), comprised of cash
and warrants.
4.2 The cash portion of LBC's Fee shall equal 6% of the Transaction
Amount and shall be paid as proceeds are received by the Company. Any portion of
LBC's Fee (cash or warrants) that is attributable to proceeds to be received by
the Company upon the occurrence of a future event, or the satisfaction of a
contingency, shall be paid when the event occurs or the contingency is
satisfied.
4.3 Upon completion of one or more Transactions, for each $1,000,000 of
Transaction Amount, on a pro-rata basis after transactions aggregating at least
$1,000,000 have been closed, LBC or its designee agrees to purchase, and the
Company agrees to sell for $2,500, a seven year warrant ("Warrant") equal to
120,000 common shares exercisable at a price per share equal to 125% of the
average closing price for the 5 trading days preceding the execution of this
Agreement. The warrant will contain standard provisions as to anti-dilution,
registration rights, transferability, etc.
4.4 LBC's fee shall be payable upon consummation of any Transaction
which occurs as a result of an agreement with an Entity entered into 1) during
the term of this Agreement (Phase I), or 2) within 18 months following
termination of this Agreement with regard to Entities, or their affiliates,
identified by LBC with which the Company has had discussions during Phase I, or
3) within 36 months following the termination of this Agreement with any Entity,
or their affiliates, with which there has been a transaction during Phases 1) or
2) above.
5. Indemnification.
5.1 LBC will assume that (a) all information furnished by the Company
or its representatives, as well as all information contained in documents
prepared by or for the Company that is publicly available or made available to
LBC by the Company, is complete and accurate in all material respects, and does
not omit any material fact or information necessary to make the statements
contained therein not misleading, and (b) the Company has complied or prior to
closing will comply with all applicable laws relating to the issuance of
securities, provided that LBC will not offer or sell any securities in any
jurisdiction without the prior consent of the Company.
5.2 If the Company fails to fulfill its obligations under this
Agreement, the Company will be responsible for resulting expenses, including
legal expenses, if any.
5.3 The Company will indemnify and hold harmless LBC, its affiliates,
successors, assigns, directors, officers, agents, employees and their heirs,
executors, administrators and all persons, firms and entities who might be
claimed to be jointly or severally liable with LBC ("Indemnified Parties") from
and against any and all losses, claims, damages, liabilities, costs and expenses
(including any legal fees and costs incurred in connection with such claim) to
which such Indemnified Parties may become subject as a result of the performance
of LBC's services hereunder under any applicable federal or state law or
otherwise, except to the extent
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October 17, 1996
that any such loss, claim, damage or liability, cost and expense is finally
judicially determined to have resulted from LBC's negligence or misconduct in
the performance of its services hereunder.
6. Transaction and Transaction Amount
6.1 The term "Transaction" means any transaction or series or
combinations of transactions, such as financing which may include lending
transactions, whereby, directly or indirectly, control of or an interest in the
Company, its affiliates, or any business with common management with the
Company, or any of their respective assets, capital stock or other securities,
may be transferred for consideration, including without limitation a merger,
acquisition, sale or exchange of stock or assets, lease of assets with or
without purchase option, joint venture, royalty or licensing arrangements,
minority investment or partnership.
6.2 The term "Transaction Amount" shall mean the gross amount of
consideration exchanged or provided to or by the Company or its shareholders, in
a Transaction, or any entities formed in or which results from a Transaction.
The Transaction Amount shall be cumulative (e.g. if the Company receives initial
consideration and subsequent royalty and/or licensing fees, warrant exercise
funds, etc.) such that the Transaction Amount shall include all such
consideration.
7. General Provisions.
7.1 For the purposes of this Agreement, the term "Company" includes any
entity which acquires (by merger or otherwise) all or substantially all of its
assets, and the successors or assigns of the Company.
7.2 The headings on the various paragraphs of this Agreement are solely
intended to simplify the reading of this Agreement and are not meant to impart
any meaning to the Agreement.
7.3 LBC will not be responsible for any fees, commissions or expenses
payable to any other person, firm or Entity.
7.4 This Agreement may not be amended or modified except in writing and
shall be governed by and construed in accordance with the laws of the State of
California.
8. Expenses.
8.1 Concurrent with the execution of this Agreement, the Company will
issue to LBC a $2,500 non-accountable expense allowance. In addition,
identifiable expenses shall be reimbursable by the Company, not to exceed $5,000
without the prior written authorization by the Company.
8.2 Upon the successful completion of a Transaction, the Company agrees
to publish a "Tombstone" advertisement in the Wall Street Journal.
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October 17, 1996
9. Acceptance and Effectiveness.
9.1 Execution of this letter by the Company, and return of a signed
copy, by fax or otherwise to LBC, completes this Agreement between LBC and the
Company.
9.2 Nothing herein shall obligate the Company to enter into any
financing proposed by LBC.
If the foregoing is acceptable to you, please sign and return the
enclosed copy of this letter to my attention.
Very truly yours,
LBC Capital Resources, Inc.
By: /s/Xxxxx X. Xxxxxxxxx
------------------------
Xxxxx X. Xxxxxxxxx
Managing Director
ACCEPTED:
EDnet
By: /s/Xxx Xxxxxxxxx Date: 10/21/96
------------------------------------ ---------------------
Xxx Xxxxxxxxx
Chairman and Chief Executive Officer
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LBC Capital Resources, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
TEL: 000-000-0000
FAX: 000-000-0000 EDnet
Proposed Summary of Principal Terms
Amount: $ 5 million
Type: Convertible Preferred via Regulation D
Dividends: 8% per annum (payable in shares of common upon conversion)
Conversion Price: 100% of the average closing bid price for the five trading
days prior to closing the transaction.
Redemption: Redeemable in whole or in part by the Company any time after
the first year of issuance, if stock rises (for any
consecutive 20 day trading period) to 200% or more of the
average closing bid price for the five trading days prior to
closing the transaction.
Mandatory
Conversion: The Preferred will be converted at the Company's option
concurrently with the closing of an underwritten public
offering of the Company's Common Stock so long as the gross
aggregate amount raised by such offering equals or exceeds
$10 million and the gross public offering price equals or
exceeds $8.00 per Common Share.
Warrants: The holder will receive one half purchase warrant for each
share received upon conversion. The terms shall be 5 years
and the exercise price 150% of the average closing bid price
for the five trading days prior to closing the transaction.
The Company will have the right to call the warrants any
time after one year if the Common Stock rises (for any
consecutive 20 day trading period) to 250% or more of the
average closing bid price for the five trading days prior to
closing the transaction.
Registration: Within 90 business days from closing, the Company will use
it's best efforts to file a Registration Statement covering
the resale of shares of common stock into which the
Preferred Stock may be converted and for which warrants may
be exercised.
Conditions: Mutual agreement on the specific details of the investment.
Satisfactory completion of due diligence.
