EXHIBIT 10.4
[Letterhead of XXXxxxxxx.xxx, Inc.]
Term Sheet between
XXxxxxxxx.xxx, Inc. ("PCSP", "Borrower")
and
Xxxx Xxx and Associates ("MLA")
Term Convertible Debt Facility.
All dollar amounts are referenced in US dollars.
Issuer: XXxxxxxxx.xxx, Inc.
MLA: Xxxx Xxx and Associates, domiciled at 00 Xxxxxxxxxx Xxxx,
Xxxxxxx, XX, 00000.
Issue: US$1,000,000 Term Convertible Debt Facility. Debt is convertible,
together with interest accrued and unpaid, into Common Shares of
PCSP at a price of $2.00 per Common Share. This conversion will
occur anytime at Xxxxxx's discretion, or at Xxxxxxxx's discretion
anytime after 60 days after the date of signing of the contract.
Such Common Shares to be registered as contemplated below.
Lender: Accredited Investors designated by MLA. Accredited Investors are
defined in Exhibit A.
Interest: This Debt Facility shall bear interest at a rate of 10% per
annum. Interest to accrue until Debt Facility is converted into
Common Shares.
Drawdown: At Borrower's request.
Security: Convertible Debt Facility to be secured by General Security
Agreement on the assets of PCSP (including, but not limited to
PCSP's URLs).
Prepayment: No prepayment feature.
Fee: MLA shall receive 1,000,000 'A' warrants and 5 00,000 'B'
warrants, each set of warrants will have a two-year term. Each
'A' warrant entities the holder to acquire one Common Share of
PCSP at a price of $1.25 in the first year and $1.75 in the
second year. Each 'B' warrant entitles the holder to acquire one
Common Share of PCSP at a price of $2.00 in the first year and
$2.50 in the second year. Prior to the Closing Date, MLA will
advise PCSP of the specific individuals or entities who are to
receive such warrants. Immediately upon Closing, PCSP
will issue such warrants in accordance with such advice.
MLA may not exercise the warrants for a period of 90
days after the date of closing. The warrants will be
transferable at the option of the holder to accredited
investors.
Advisory Services: MLA will use best efforts to introduce PCSP to
significant retail, institutional, financial analyst and
nationally recognized investment banking opportunities
and provide general business advice. All reasonable
business-related expenses towards these introductions
will be paid by PCSP. Expenses greater than $1500 must
receive prior approval. The 'A' and 'B' warrants will
constitute the entire fee to MLA for such advisory
services until the time that PCSP is launched on the
NASDAQ Small Cap or National Markets exchange with
significant retail, institutional, analyst and
nationally-recognized investment banker support. At such
time, the parties will determine the future services to
be provided by MLA to PCSP, if any, and the compensation
for such future services.
Registration: PCSP commits, upon funding of the Convertible Debt
Facility, to immediately prepare and file with the
Securities and Exchange Commission a registration
statement under the Securities Act of 1933 as amended,
to register all of PCSP's Common Shares issuable upon
exercise of the 'A' and 'B' warrants, and all other
shares issuable upon conversion of the Convertible Debt
Facility, together with all other shares, options and
warrants which enjoy piggy-back registration rights or
which PCSP wishes to register at this time. The likely
format will be a Form SB-2. PCSP will maintain the
registration statement current for a period of two years
from the data of Closing of this transaction.
Term: This Debt Facility shall have a term ("Term") of 120
days. If at 60 days after the date of signing of the
contract, PCSP has not secured additional financing with
gross aggregate proceeds of at least US$2,000,000, MLA
agrees to, upon notification from PCSP, use best efforts
to provide financing for PCSP before the end of the Term
on terms approximately as follows: at least 1 million
Common Shares at a share price of at least $2.00 with
one-half warrant exercisable for one year at $2.00 per
share, with similar registration rights as contemplated
herein.
Acceptance: Signatures by facsimile will be acceptable to both
parties until original signed copies are in the
possession of both parties.
AGREED:
/s/ Xxxxx X. Xxxxx
--------------------------------
XXxxxxxxx.xxx, Inc.
/s/ Xxxxxxx Xxx
--------------------------------
Xxxx Xxx and Xxxxx.
2-24-2000
--------------------------------
Date
EXHIBIT A
Definition of Accredited Investor
An "accredited investor" means:
(i) a natural person who either (a) has (along with his/her spouse)
a net worth which exceeds $1,000,000 at the time of the purchase or (b) has had
an individual income in excess of $200,000 (or a joint income with his/her
spouse which exceeds $300,000) for each of the two most recent years and has a
reasonable expectation of reaching the same income level (or joint income level)
in the current year;
(ii) any bank or savings and loan association acting in its
individual or fiduciary capacity, any registered broker-dealer, insurance
company, registered investment company, business development company, small
business investment company or employee benefit plan (a) if the investment
decision is made by a fiduciary which is a bank, savings and loan association,
insurance company or registered investment advisor or (b) if the plan has total
assets in excess of $5,000,000 or (c) if a self-directed plan, the investment
decisions are made solely by persons that are accredited investors;
(iii) any private business development company;
(iv) any organization under section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000;
(v) any trust with assets in excess of $5,000,000 not formed for the
specific purpose of buying the securities offered, whose purchase is directed by
a "sophisticated person";
(vi) any director or executive officer of the issuer; or
(vii) any entity in which all equity owners are accredited investors.
