Exhibit 9.6
December 19, 2000
Sickbay Health Media, 1nc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx
Attn: Xx. Xxxx Xxxxxx, Chairman and. Chief Executive Officer
Investment Banking Engagement
Dear Xx. Xxxxxx:
Sickbay Health Media, Inc. (the "Company") and Burlington Capital Markets,
Inc. ("Burlington") have been discussing the possibility of Burlington,
assisting, and adding value to the Company by. providing services, strategic
relationships and assistance in connection with future financing for the
Company. This letter agreement ("Agreement") will confirm the terms and
conditions under which Burlington will provide investment, -banking AND
BUSINESS- AND STRATEGIC consulting services to the Company, and assist in
meeting the Company's subsequent financing needs as follows:
For the purposes of this Agreement:
(a) A "Transaction" shall mean the completion of any private placement of
the Company's securities, including but not limited to. debt or notes with or
without an equity or warrant component, convertible debt including convertible
debentures or notes, common equity or preferred equity; -and -any transaction or
series or combination of transactions -involving the Company, other than in the
ordinary course of trade or business, whereby, directly or indirectly, control
of, or a material interest in any businesses, assets or properties, is sold,
purchased, leased or otherwise transferred, including, without limitation, a
sale, -purchase. or exchange of capital stock or assets, a lease of assets with
or without a purchase option, a merger or consolidation, a tender or exchange
offer, a leveraged buy-out, a restructuring, x re-capitalization, a
repurchase-of capital stock, an extraordinary dividend or distribution (whether
cash, property, securities or a combination thereof), a liquidation, the
formation of a joint venture or partnership, a minority investment or any other
similar transaction:
(b) "Consideration" shall mean the total value of- 'all cash, securities,
other property and any other consideration, including, without
limitation, any contingent, earned or other consideration paid or payable,
directly or indirectly, in connection with a Transaction and consideration shall
be determined at the closing. The value of any such securities (whether debt or
equity) 'or other property shall be- determined A FOLLOWS: (1) THE VALUE OF
SECURITIES that are freely tradable in an established public market shall be the
last closing market price of such securities prior to the public announcement of
the Transaction; and (2) the value of securities which are not freely tradable
or which have no established public market, or if the consideration consists of
property other than securities, the value of such securities or other property
shall be the fair market value thereof as mutually agreed by the Company
and-Burlington. Consideration shall also be deemed to include any indebtedness,
including, without limitation, pension liabilities, guarantees and other
obligations assumed, directly or indirectly; IN CONNECTION with, or which
survives the closing of, a Transaction, If the consideration to be paid is
computed or payable in any foreign currency, the value of such foreign currency
shall; for the purposes hereof, be converted into U.S. Dollars at the prevailing
exchange rate on the dates on which such consideration is payable.
1. ISSUANCE OF SHARES AND WARRANTS
1. Grant of Shares: Grant of Warrants; Registration Rights.
(a) The Company irrevocably agrees to assign, transfer and deliver to
Burlington; an aggregate* of 500,000 shares (the "Shares") of the Company's
Common Stock (the "Common Stock"), FOR GOOD and valuable consideration of which
is reflected Burlington's consulting services being rendered hereunder in
accordance with the provisions of Section 2.0-2. The Shares will consist of
legended certificates representing "restricted stock" as defined under Rule 144
of the Securities and Exchange Commission ("SEC").
(b) In addition, for its consulting services hereunder, 180 days of the
date hereof, the Company irrevocably agrees to assign, transfer and deliver to
Burlington, and Burlington agrees to purchase, an aggregate- of 100;00O- SHARES
(the "Retainer Shares") of the Company's Common Stock, at a cash purchase price
of $.Ol per share or a total purchase price of S 1,000. Three (3) additional
amounts of 100,000 Retainer Shares each shall be assigned, transferred and
delivered to Burlington, and Burlington AGREES TO PURCHASE, AN aggregate of
300,000 Retainer Shares of the Company's Common Stock, of which an aggregate of
100,000 Retainer Shares per quarter at the beginning of the three (3) subsequent
quarters, at a cash purchase price of $.Ol per share, total purchase price of
$1,000 per each quarter, or a total purchase price of $3,000 so long as this
Agreement is in effect; but in no case Burlington receive less than
200,000-Shares, The RETAINER SHARES
WILL CONSIST of legended certificates representing "restricted stock" as defined
under Rule 144 of the SEC.
(c) In addition, for its consulting services hereunder, The Company hereby
irrevocably agrees to assign and transfer to Burlington, or to cause the Company
to grant and issue to Burlington, the following warrants ("Warrants") to
purchase shares of Common Stock; (i) Warrants to purchase 200,000 shares of
Common Stock at an exercise price of $3.00 per share, exercisable at any time
after 180 days of the date hereof; (ii) Warrants to purchase 100;000 shares at
an exercise price of 54.50 per share, exercisable any time after 180 days of the
date hereof. The Warrants (x) will be exercisable in whole or in part during a
term of five years from date on which they can first be excercised, (y) will
include registration rights (as set forth below), (z) will contain a cashless
exercise provision, (v) will have limited transferability to designees of
Burlington, (vi) will contain standard anti-dilution and price
protection-provisions; and (vii) will otherwise be acceptable in form and
substance to the parties and their respective counsel.
(d) The Company will enter into a registration rights agreement with
Burlington satisfactory to Burlington, under which Burlington and its
.assignees. will. have piggyback registration rights for any of the Shares,
which constitute restricted securities, and for all shares purchasable through
the exercise of the Warrants. The shares of the Company's Common Stock
underlying the Warrants and the Warrants to be issued to Burlington shall have
unlimited demand piggyback registration rights after 180 days which will allow
the holder of the Warrants to include the underlying shares as well as the
Warrants in any Registration Statement to be filed by the Company without cost
or expense to Burlington or the holder of the Warrants. Such-registration rights
agreement shall-contain provisions customarily included in investment banking
transactions and shall also provide that, if the Company does not file a
registration statement for a second public offering within 120 days after the
execution of this Agreement, the, registration rights granted shall include at
least one full demand registration right at the Company's expense and one such
demand at Burlington's expense.
1.02.. Form of a t~ Payment shall be made by check drawn on or wire
transfer from a commercial bank to the order of the Company, concurrently with
the delivery of the Shares.
IL. ENGAGEMENT OF INVESTMENT BANKING SERVICES; COMPENSATION
2.01 Engagement of Burlington Term. The Company hereby engages Burlington
to provide the Company with investment banking and .financial consulting and
strategic planning services, in connection with the Company, for a term which
will. terminate on, the second anniversary of the signing of this Agreement (the
"Tern").
2.02 Burlington Services. On the terms and conditions set forth in
this Agreement, Burlington will provide the following services;
(a) Burlington will review the Company's structure, operations, marketing,
capitalization and development and strategic goals, and will assist in
revising the Company's business plan and in the completion of an
updated Company business summary suitable for presentation to
institutional and overseas investors.
(b) Burlington will provide general technical and business consulting with
regard to strategic relationships and Internet-based affiliations for
the Company.
(c) Burlington will review the Company's financial statements and
projections and will advise the Company on developing a credible
financial plan to present to the investment community.
(d) Burlington will advise the Company on strengthening and expanding the
Company's management team.
(e) Burlington will advise the Company on additional steps to be taken to
increase the potential valuation of the Company by future
institutional investors.
(f) Burlington will introduce the Company to potential strategic partners
and to European investment banking firms and other sources of
financing. located- within the European Union.
(g) Burlington .will advise the Company, on structuring and marketing a
proposed private placement, on a best efforts basis, in an aggregate
amount no less than $2 million and no more than $10 million.
(h) Burlington will . advise the Company on steps to be taken to prepare
the Company for a future second. public offering, and will assist the
Company in screening and selecting an appropriate underwriter of such
offering and- in negotiating the terns-of such offering.
(i) Burlington will assist the Company in identifying and developing
potential merger and acquisition transactions for the Company, in
accordance with the provisions of Section 3.04.
III. COMPENSATION AND EXPENSES
3.01 COMPENSATION. Burlington shall be compensated at the rate of ten
thousand dollars ($10,000) per month for the Term of this Agreement and any
renewal term- The compensation will accrue on a prorated basis upon the signing
of this Agreement and shall be due and payable to Burlington
at the mutual agreement between the Company and Burlington there is adequate
capitalization available from the Company. So long as this Agreement is in
effect, but in no case will Burlington receive less than $60,000 under this
Agreement. Burlington xxxx not seek additional compensation for its services.
under this Agreement except as expressly otherwise provided herein.
3.02. Expenses. Notwithstanding any. provision of this Agreement to the
contrary, the Company agrees to reimburse Burlington for all reasonable
out-of-pocket expenses incurred in connection with the ___________ performed
under this Agreement and as agreed by the Company. Burlington may xxxx the
Company on a monthly basis for such disbursements, which, shall be reimbursed
promptly upon receipt of invoices therefore. Such expense shall include, but
shall not be limited to, travel (business class unless otherwise agreed), hotel,
international and long distance communication costs, courier and messenger
services, printing and commercial reproduction costs, and the reimbursement of
costs, fees and disbursements incurred by Burlington and related to Burlington's
performance of its obligations under this Agreement, provided that such counsel
fees shall be reasonable in amount and- shall be reflected -in-invoices from
such counsel. to Burlington, copies of which shall be delivered to the Company.
All expenses in excess of $250 shall be pro-approved in writing by the Company.
3.03 Extraordinary Capital Formation Services. If during the Term of this
Agreement the Company closes any transaction ("Transaction") involving the
formation of capital through debt instruments and/or equity securities, or any
other financial. transaction through .a. funding. source. identified by
Burlington, or any Transaction resulting in financing for the Company, in such
event, Burlington will be entitled to contingent compensation for such
extraordinary services; to be equal to. seven percent (7%) and two percent
(2(Degree)/u) for non-accountable expenses in aggregate value of the
consideration exchanged in such transaction. Burlington's fee shall be paid in
cash, simultaneously with the closing of the transaction. It shall be a material
breach of this Agreement if the Transaction is closed without Burlington
receiving its full fee as set forth in this paragraph.
3.04 Extraordinary- Merger and Acquisition Services. If, during the Term of
this Agreement, the Company considers any merger or acquisition transaction
initiated through Burlington, the Company requests that Burlington represent the
Company in negotiating and consummating such merger or acquisition, Burlington
will act as the representative of the Company in connection with such
Transaction, and will so assist the Company. In-such-event-Burlington-will be
entitled to contingent compensation for such extraordinary services, to be equal
to 5% payable in cash with respect to any such merger or acquisition transaction
actually entered into by the Company, of the first $5 million, and 2(Degree)/a
of all amounts over $'5 million in aggregate value of the consideration
exchanged in such transaction. Burlington's fee shall be paid in cash,
simultaneously with the closing of the business combination. It shall be -&
material- breach of this Agreement if the business combination is closed without
Burlington receiving its full fee as set forth in this paragraph.
3.05 Consummated Transaction after Cancellation of Agreement. If, upon
cancellation, termination or-expiration-of this Agreement the Company is a party
to an executed letter of intent or an agreement relating to a business
combination which leads to a consummated transaction (i) involving the raising
of capital through debt instruments- and for equity securities, Burlington shall
receive a fee of ten percent (10%) of the "gross transaction amount" (The gross
transaction amount is defined as the total value of a new line of credit and/or
any amount paid to the Company as equity and/or debt. or (ii) resulting. in. the
purchase or, merger of net assets or stock, Burlington shall receive a fee of
five percent (5%) of the total Consideration paid, notwithstanding that the
consummation occurs anytime subsequent to the Termination. If at the Termination
no letter of intent or other agreement is outstanding, Burlington shall furnish
the Company with a list of all potential candidates it contacted and
participated in discussions with prior to the Termination. - If a business
combination is concluded within twenty-four (24) months from the Termination
with a candidate set forth on said list, Burlington shall be entitled to the
SAME FEES outlined in paragraphs 3.03 and 3.04 above as. if the business
combination had been consummated during the. term of this Agreement. The Company
shall furnish to Burlington the names of all parties with which the Company has
had discussions or contact prior to the date hereof concerning a Transaction.
IV. REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties. The Company hereby represents and
warrants, knowing that Burlington is relying thereon, that:
(a) The Company was incorporated in Utah and is duly organized, validly
existing and in good standing in such state: The Company is-qualified
to do business as a foreign corporation in each state in which its
business requires it to be so qualified.
(b) The Company is a reporting company registered under Section 12 of the
Securities Exchange Act of 1 934, and is listed on the Small Cap
Market System of the NASDAQ.
(c) The information concerning the Company and its business, as furnished
and to be furnished to Burlington, will be complete and correct in all
material respects and will not contain any untrue statement of
material fact or omit to state a material-fad necessary in order to
make the statements therein not materially misleading in light of the
circumstances under which such statements are made. The-Company will
notify Burlington promptly concerning any statement which is not
accurate or which is or has become incomplete or misleading in any
material respect.
(d) This Agreement has been duly and validly authorized and executed and
delivered by and on behalf of the Company and constitutes the valid
and binding agreement of the Company enforceable in accordance with
its terms.
(e) The Shares are duly and validly issued, fully paid and non-assessable,
and the Company has full right and-power to sell, assign or deliver
such-Shares to Burlington, free and clear of all liens, claims and
encumbrances. The Warrants, when issued and delivered to Burlington,
will have been duly and validly issued and are non-cancellable and
binding-obligation of the Company, exercisable in accordance with
their terms. The Company will have reserved, upon the issuance of the
Warrants, a sufficient number of authorized shares of Common Stock to
enable the Warrants to be exercised in accordance with their terns.
4.02 Burlington Representations and Warranties. Burlington hereby
represents and warrants, knowing that the company is relying thereon, that
Burlington (i) is a broker-dealer duly registered with the Securities and
Exchat:geCommissi4n and various state securities-agencies; and (ii) is a member
firm of the National Association of Securities Dealers, Inc. in good standing.
V. ADDITIONAL UNDERTAKINGS
5.01 Access to Information and Documentation; Confidentiality, The Company
will make its personnel, products and product documentation available for
technical and product inspection, evaluation, and due diligence by Burlington.
In addition; the Company's director, officers and professional advisers agree to
furnish information and copies of documents to and to otherwise cooperate with,
counsel for Burlington in connection with Burlington's due diligence.
activities. The Company agrees to finish Burlington with all information and
data concerning the Company in which Burlington deems reasonably necessary to
the performance of its functions. Except as otherwise-agreed to by the Company,
or required by law, all information concerning the Company which is not publicly
available will be kept strictly confidential by Burlington.
VI. RENEWALS AND TERMTNAT10N
6.01 EXTENSION AND RENEWAL. The Term may be extended or renewed by the
mutual written agreement of the parties.
6.02 TERMINATION. Either party may terminate this Agreement for cause upon
not less than 15 days notice in the event of a material-breach of this Agreement
by the.other party, which breach is not cured within 30 days after the giving of
notice to the breaching party specifying the circumstances of such breach.
6.03 CONSEQUENCES OF TERMINATION. In the event of any termination or
expiration of this Agreement; whether or not for -cause-, and regardless .of
circumstances. or asserted fault or lack thereof, Burlington will be deemed to
have fully earned the compensation represented by the sale and issuance to it of
the Shares and Warrants, and no Shares orWarra= will bereturned-of re-sold to
the Company.
VII.INDEMNIFICATION
7.01 INDEMNIFICATION. Because Burlington will be acting on behalf of the
Company in a variety of matters as set forth in. this Agreement, the parties
have agreed that Burlington will be entitled to indemnification under the terms
of the separate letter indemnification agreement attached hereto as Exhibit A.
VIII.MISCELLANEOUS
8.01 Governing Law and Disputes. This Agreement shall be governed by the
laws of the State of New York, without regard to- choice of law pro-visions,
except .with respect to any matter governed by applicable federal securities
laws. The parties agree that any dispute under this Agreement will be resolved
in a ;Federal or state court located in the County; City and State of New York,
and WILL submit to the jurisdiction of such court for such purpose.
8.02 Waiver.. Xxx party hereto may waive compliance by the other with any
of the terms, provisions. and conditions set forth herein; provided, however,
that any such waiver shall be in writing specifically setting forth those
provisions waived. thereby. No-such-waiver shall be deemed to constitute or
imply waiver of any other teen, provision or condition of this Agreement.
8.03 Assignment. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto-, and their -respective heirs, legal
representatives, successors and assigns. 'this Agreement may not be assigned
without the consent of the parties.
8.04 Survival. The representations and warranties of the parties contained
in this Agreement will remain operative and in full force and effect and WILL
survive any termination of this Agreement.
8.05 Notices. All notices required or permitted under this Agreement shall
be in writing and- shall be sent by certified ox registered, first class mail,
return receipt requested, or shall be personally delivered, or sent by an
overnight delivery service such as Federal Express, or shall be transmitted by
facsimile (provided such facsimile message is confirmed by telephonic,
acknowledgment of receipt or by sending via other authorized means a
confirmation copy of such notice) addressed to the parties at their respective
last known business addresses to the parties will be deemed complete upon
receipt.
8.06 Entire Agreement. This Agreement constitutes the entire understanding
of the parties as to its subject matter, and supersedes any and all prior
agreements or understandings, oral or written. This Agreement may not be
changed, except through a written instrument signed by the parties.
Burlington looks. forward to working closely with you to develop the great
potential of the Company. Please indicate your consent to the foregoing terms
and conditions by signing and returning a duplicate of this letter.
Sincerely yours,
BURLINGTON CAPITAL MARKETS INC.
By:
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Chairman and Chief Executive Officer
AGREED:
SICKBAY HEALTH MEDIA, 1NC.
BY:
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Chairman and Chief Executive Officer
EXHIBIT A
December 19, 2000
Burlington Capital Markets Inc.
00 Xxxx Xxxxxx - SS`s' Fl.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chairman and Chief Executive Officer
DEAR Sir:
In connection, with your .engagement pursuant to our letter agreement of
even date herewith (the "Engagement"), we agree to indemnify and hold harmless
Burlington Capital Markets, Inc. ("Burlington" or "you") and its affiliates, the
respective directors, offices, partners,, agents and employees of Burlington and
its affiliates, and each person, if any, controlling Burlington or any of its
affiliates (collectively "Indemnified Persons"), from and against, and are agree
that no Indemnified Person shall have any liability to us or our owners,
parents, affiliates, security holders or creditors for, any losses, claims,
damages or liabilities (including actions or proceedings in respect thereof
(collectively "Losses".) (&).related to or arising out of (i) our actions or
failure to act (including statements or omissions made, or information provided,
by us or our agents) or (ii:) actions or failure to act by any indemnified
Persons with-our consent or in reliance on our actions or failure to act, or (B)
otherwise related to or arising out of the Engagement or your performance
thereof, except that this clause (B) shall not apply to any Losses that arc
finally judicially determined to have resulted primarily from your bad faith or
gross negligence or breach of this agreement. If such indemnification is for any
reason not available or insufficient to hold you harmless, we agree to
contribute to the Losses involved in such proportion as is appropriate to
reflect the relative benefits received (or anticipated to be received) by us and
by you with respect to the Engagement or if such allocation is judicially
determined to be unavailable, in such proportion as is appropriate to reflect
other equitable considerations such as the relative fault of us on the one hand
and of You on the other hand provided, however that, to the extent permitted by
applicable law, the Indemnified Persons shall not be responsible for amounts
which in the aggregate are in excess of the amount of all fees actually received
by you from us in connection with the Engagement. Relative benefits to us, on
the one hand, and you, on the other hand, with respect to the Engagement shall
be deemed to be in the same proportion as (i) the total value paid or proposed
to be paid or received or proposed to be received by us or our security holders,
as the case may be, pursuant to the transaction(s), whether or not consummated,
contemplated by the Engagement bears to (ii) all fees paid or proposed to be
paid to you by us in connection with the Engagement.
We will reimburse each Indemnified Person for all expenses (including
reasonable fees and disbursements of counsel) as they-are-incurred by such
Indemnified Person in connection with investigating, preparing for or defending
any action, claim, investigation, inquiry, arbitration or other proceeding
("Action") referred to above (or enforcing this agreement or any related
engagement agreement), whether or not in connection WITH pending or threatened
litigation in which any Indemnified Person is a party, and whether or not such
Action is initiated or brought by you. Vie further agree that we will not settle
or compromise or consent to the entry of any judgment in any pending or
threatened Action in respect of which indemnification may be sought hereunder
(whether or not an Indemnified Person-is a party offering unless we have given
you reasonable prior written notice thereof and used all reasonable efforts,
after consultation with you, to obtain an unconditional release of each
Indemnified Person from all liability arising therefrom. . In the event we are
considering entering into one or a series of transactions involving a merger or
other business combination or dissolution or liquidation of all or a significant
portion of our assets; we shall promptly notify yon in wrting. If requested by
you, we shall then establish alternative means of providing for our obligations
set forth herein on terms and conditions reasonably satisfactory to you.
If multiple claims are brought against you in any Action with respect to at
least one of which indemnification! is permitted under applicable law and
provided for under this agreement, we agree that any judgment, arbitration award
or other monetary award shall be conclusively deemed to be based on claims as to
which indemnification is permitted and provided for. Our obligations hereunder
shall be in addition to any rights that any Indemnified Person may have at
common law or otherwise. Solely for the purpose of enforcing this agreement, we
hereby consent to personal jurisdiction and to service and venue in any court in
which any claim, which is subject to this agreement, is brought by or against
any Indemnified Person. We acknowledge that in connection with the Engagement
you are acting as an independent contractor with duties owing solely to us. '
The provisions of THIS AGREEMENT SHALL APPLY to the ENGAGEMENT (INCLUDING
related activities prior to the date hereof.) and any modification thereof and
shall remain in full force and effect regardless of the completion OR
TERMINATION of the Engagement. This agreement and ally, other agreements
relating to the Engagement shall be under seal, governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of law principles thereof.
Very truly yours,
SICKBAY HEALTH MEDIA, INC.
By:
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Chaimf;Eh and,Chief Evcuriv.&-E)fficer
