Exhibit 7(b)
LETTER OF INTENT
DATED DECEMBER 07, 2000
BETWEEN: ESYNCH CORPORATION ("eSYNCH") is a corporation duly
incorporated under the laws of Delaware, having its
head office at 00000 Xxxxxx Xxx. Xxxxxx, XX 00000,
and is an operating Internet development company that
focuses on streaming and video-on-demand media
applications, and is represented by its Chief
Executive Officer, Xxxxxx Xxxxxxxxx.
AND: STREAMEDIA COMMUNICATIONS INC. ("STREAMEDIA") is a
corporation duly incorporated in Delaware, having its
head office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, and is an operating Internet development
company that focuses on streaming media applications,
and is represented by its President, Xxxxx Xxxxxx.
THE PARTIES HEREBY AGREE TO THE FOLLOWING LETTER OF INTENT:
1. MERGER. STREAMEDIA and eSYNCH agree that, subject to approval by the
shareholders of STREAMEDIA and eSYNCH, eSYNCH will merge with a wholly
owned subsidiary of STREAMEDIA (the "Transaction"). The parties will
structure the transaction in a manner so that each party can comply
with applicable legal, tax and accounting requirements.
2. REVERSE SPLIT. Concurrent with the merger described in paragraph 1, the
common stock of STREAMEDIA will undergo a reverse split. The ratio of
the reverse split will depend on the price of the common stock (par
value of $0.001 per share) of STREAMEDIA ("old STREAMEDIA stock") at
the time the parties enter into the Transaction Agreement, which is
described in paragraph 5.
a. RATIO. STREAMEDIA and eSYNCH anticipate that the ratio will
likely be one new share ("new STREAMEDIA stock") for at least
each five shares of old STREAMEDIA stock.
b. PROCEDURE. The STREAMEDIA board of directors will determine
the reverse split ratio and present it to the shareholders of
STREAMEDIA in the resolution declaring the advisability of the
merger between STREAMEDIA and eSYNCH, as required by Delaware
law. Both parties understand that the goal of the reverse
split is so the new STREAMEDIA stock will trade at or above
$10.00 per share.
3. TERMS OF TRANSACTION AGREEMENT. The following terms shall be
contemplated by the Transaction Agreement:
a. CONSIDERATION. In the Transaction, STREAMEDIA will issue
shares of authorized and previously unissued common stock
to shareholders of eSYNCH.
b. SHARE ISSUANCE RATIO. STREAMEDIA will issue common stock,
as described in this paragraph 3, that upon consummation of
the Transaction, each eSYNCH shareholder will receive
shares of old STREAMEDIA stock at the following ratio:
For each share of eSYNCH held, the shareholder will
receive 3 shares of old STREAMEDIA stock (or $6.00
worth of old STREAMEDIA stock, as valued by the
closing share price on the trading date prior to the
closing of the Transaction).
c. ADJUSTMENT. The ratio described in this paragraph 3 will be
adjusted to account for the reverse stock split that will
occur before the Transaction, as described in paragraph 1.
d. ESYNCH OPTIONS AND WARRANTS. STREAMEDIA shall assume options,
warrants, and other securities of eSYNCH in accordance with
the terms of those securities.
e. REGISTRATION OF ISSUED STOCK. Unless exempt from registration
under the Securities Act of 1933, STREAMEDIA agrees to
register the common stock that STREAMEDIA will provide to
eSYNCH shareholders under this paragraph 3, and to qualify
these securities under applicable state securities laws
(unless an exemption applies). STREAMEDIA also agrees to
register the options or warrants that it will assume under
this paragraph 3 with the Securities and Exchange Commission
and applicable state securities authorities, unless exempt
from such registration requirements.
f. TIMING. Both parties will act in good faith to complete the
transaction as soon as reasonably possible. The parties
intend to immediately negotiate the definitive agreements,
and commence preparation of all necessary filings.
g. REQUIRED CONSENTS. Each of the parties will use its best
efforts to obtain all necessary consents required of it from
third parties relating to the Transaction, and to cooperate
with the other party in its efforts in such respects.
4. APPROVALS AND CONSENTS.
a. SHAREHOLDER CONSENT. It is currently anticipated that the
Transaction shall require approval of each respective
party's Board of Directors and stockholders, as may be
required by their governing documents and applicable law. If
approval of stockholders is required for the Transaction, the
Board of Directors of STREAMEDIA and the Board of Directors
of eSYNCH will, consistent with their fiduciary duties,
recommend the Transaction to their respective stockholders,
and, subject to the requirements of applicable law, will seek
written consent from their respective stockholders.
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b. CONSULTATION. Both parties and their respective
representatives or counsel will consult with each other
concerning the form and content of the consent described in
this paragraph 4.
c. STREAMEDIA -- TERMINATION. The Board of Directors of
STREAMEDIA may, in its discretion, elect to not consummate
the Transaction if its new common stock does not have a
value of $10.00 or more per share or if the ratio of the
reverse split described in paragraph 1 is greater than 1
for 5 to attain a price of at least $10.00 per share by the
trading day before the day the Transaction is scheduled to
close.
d. ESYNCH -- TERMINATION. eSYNCH's Board of Directors may, in
its discretion, not consummate the Transaction if
STREAMEDIA's new Common Stock has not continued to be
listed on the Nasdaq SmallCap Market, or does not close at
a price of $10.00 or more per share as of the trading day
before the day the Transaction is scheduled to close.
e. OTHER CONSIDERATIONS. The compensation committees of the
Board of Directors of both STREAMEDIA and eSYNCH shall
jointly consider such additional matters as employee equity
incentives, steps necessary to assume and continue plans or
create plans as may be in the best interests of the
combined entity after the Transaction.
5. CONDITIONS.
a. TRANSACTION AGREEMENT. STREAMEDIA and eSYNCH agree they will
enter into a written Transaction Agreement and related
agreements and documents, to be drafted by counsel for
STREAMEDIA, containing customary representations and
warranties with respect to the Company and for the
transactions contemplated hereby and which shall be acceptable
to both parties and their respective counsels.
b. FINANCIAL INFORMATION. eSYNCH will allow STREAMEDIA
representatives full and complete access to the books and
records relating to eSYNCH, including financial statements,
tax returns, facilities, independent accountants and certain
key employees, regional sales managers, sales consultants and
purchasers and users of the eSYNCH's products. Any non-public
information obtained by STREAMEDIA or its representatives in
this connection will be maintained as confidential.
c. REPRESENTATIONS AND WARRANTIES. The Transaction Agreement
shall contain representations and warranties both by
STREAMEDIA and eSYNCH that are normally found in such
agreements as well as representations and warranties required
specifically for the purpose of the transaction contemplated
herein. The extent of the indemnity offered by the parties in
the final closing Transaction Agreement shall be negotiated to
each party's satisfaction and will be a condition to the final
closing.
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d. CONFIDENTIALITY. STREAMEDIA and eSYNCH will undertake not
to disclose or reveal, directly or indirectly, to anyone,
information about this Letter or the contemplated
Transaction Agreement or any related documents. It is
however agreed that STREAMEDIA and eSYNCH shall not be
bound by the present Section when such disclosure pertains
to the mandatory disclosures that STREAMEDIA or eSYNCH are
obligated to make according to applicable Securities Laws
or any other law to the same effect. STREAMEDIA and eSYNCH
will take all necessary actions to fully ensure the
confidentiality of any information exchanged.
e. GOVERNING LAWS. The applicable laws of the State of New
York shall govern this Letter.
f. EXPENSES. Each Party shall each be liable for its own
expenses concerning this transaction.
g. PUBLICITY. The Parties each agree that they will not make
any public disclosure of the contents of this Letter or
the transactions contemplated hereby without obtaining the
prior written approval of the other Party hereto, except to
the extent that such disclosure may be required by law, in
which case the Party required to make such disclosure shall
give the other Party 72 hours prior written notice of such
disclosure.
6. OTHER.
a. RIGHT OF FIRST REFUSAL. Until this Letter is terminated
pursuant to Section 7, neither STREAMEDIA nor its agents or
representatives shall, without the prior consent of eSYNCH,
sell, agree to sell, enter into negotiations to sell, or
discuss the sale or transfer of any material portion of the
assets or stock of STREAMEDIA, or any interest or right
therein, to or with any party except as disclosed to eSYNCH
in advance and agreed upon by both parties.
b. FEES AND EXPENSES. Each party agrees to pay the legal,
accounting and other fees and expenses incurred by it with
respect to the transactions contemplated herein, whether or
not the Transaction is consummated.
c. FINANCING. Simultaneous with the closing, eSynch agrees to
assist in the raising a minimum $5 million, through a
private placement of Stream Media stock.
7. PERIOD THIS LETTER IS VALID.
This present Letter of Intent is valid for a period two (2) days ending
December 08, 2000.
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If both parties do not agree to this Letter within this period, the
Letter will be considered null and void.
BINDING OFFER
Except for the Paragraphs 5.d., 6, and 7, which each shall be binding on the
parties, both eSYNCH and STREAMEDIA understand and agree that this Letter
shall not be interpreted as a binding contract between them. The parties
acknowledge that this Letter does not contain all the material terms and
provisions that will be applicable to the Transaction and is subject to Board
of Directors' and shareholders' approval. Paragraphs 5.d., 6, and 7 shall be
binding obligations of each party during the term of this Letter, and
Paragraph 5.d. shall survive the termination of this Letter. The parties
agree that this Letter does not (other than with respect to Paragraphs 5.d.,
6, and 7) create any binding obligation on either party, but merely expresses
the intent of both STREAMEDIA and eSYNCH to proceed with the negotiation and
preparation of definitive agreements reflecting these transactions. Subject
to the conditions herein, and upon signing the Transaction Agreement, the
terms and provisions of such agreement shall supersede this Letter.
AND eSYNCH SIGNS the present Letter this 07 day of December 2000.
eSYNCH, by:
/s/ Xxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxxx, Chief Executive Officer
For: eSynch Corp.
The present Letter is agreed to by STREAMEDIA, this 07 day of December, 2000.
STREAMEDIA, by:
/s/ Xxxxx Xxxxxx
------------------------------------------
Xxxxx Xxxxxx, President and CEO
For: Streamedia Communications, Inc.
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