SHERLEIGH ASSOCIATES LLC
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
CONSULTING AGREEMENT
November 11, 1999
MarkCare Medical Systems, Inc.
Attn: Xxxx Xxxxxxx, President
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxxx:
This letter will confirm our agreement (the "Agreement") pursuant to which
Sherleigh Associates LLC (the "Consultant"), has been retained to serve as a
management consultant and advisor to MarkCare Medical Systems, Inc. (the
"Company") and/or its subsidiaries or affiliates for a period of twelve (12)
months commencing on the date hereof unless extended by mutual written consent
of the parties hereto. The undersigned hereby agrees to the following terms and
conditions:
1. Duties of Consultant. The Consultant shall, at the request of the
Company, upon reasonable notice, render the following services:
(i) assist the Company in the presentation of an in-depth business
plan suitable for presentation to potential investors,
underwriters, strategic partners and lenders. We have agreed
that the basic components of the business plan will consist of
the following:
(a) Overview of the Company and PACS.
(b) Description of the capabilities of the Company PACS.
(c) Strategic market analysis: trends and opportunities,
domestic and international.
(d) Value proposition to the PACS' buyer including case
studies and/or testimonials.
(e) Competitive analysis of the Company PACS versus Agfa,
Kodak etc.
(f) Financial projections and capitalization.
(ii) introduce the Company to prospective underwriters, auditors
and legal counsel.
(iii) provide financial guidance on issues of budgeting,
compensation and financial structure.
(iv) assist the Company in developing sources of interim financing
should interim financing be deemed required.
(v) develop together with the Company an investor relations
program, including the hiring of an investor relations firm.
(vi) provide advice and guidance regarding an employee option and
warrant program.
(vii) provide assistance and guidance regarding a possible spin-off
of the Company from its parent company.
(viii)provide advice and guidance regarding prospective appointments
to the Board of Directors of the Company.
2. Compensation. As compensation for the services which have previously
been rendered by the Consultant on behalf of the Company with regard to the
formulation of preliminary business concepts and in consideration of the
Consultant's commitment to enter into this Agreement, the Company shall pay to
the Consultant a monthly fee of $1,000 for each month during the term hereof.
3. Issuance of Stock and Warrant.
3.1 The Company, on the execution of this Agreement, shall sell to the
Consultant the following shares and warrant in consideration of a cash purchase
price of $60,000:
(i) such number of shares of the Company's common stock (the
"Initial Shares") which shall equal (following the issuance of
such shares to the Consultant) 5% of all the issued and
outstanding capital stock of the Company on a fully diluted
basis(1); and
(ii) a common stock purchase warrant ("Warrant") to purchase, for an
aggregate purchase price of $1.00:
(a) such number of shares of the Company's common stock
("Warrant Shares") as shall equal, when added to the Initial
Shares, 5% of the Issued and outstanding capital stock of the
Company on a fully diluted basis(1), immediately following the
Company's initial round of financing (as defined herein); and
(b) 5% of the number of the Company's shares or (shares
underlying exercise of) warrants issued to any strategic
partners, employees consultants or affiliates.
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(1) Fully diluted basis shall mean all shares of the Company issued and
outstanding after taking into account (a) the exercise of all outstanding
warrants (including for purposes of section 3.1(b) the exercise of the Warrant),
options and convertible securities which are exercisable or convertible into the
Company's capital stock; and (b) any stock issued in exchange for, or
capitalization of the Company's debt to its parent company.
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3.2 The Company's initial round of financing shall mean the number of
shares issued in consideration of the first $2,000,000 raised by the Company
following the issuance of the Initial Shares. The Warrant shall have a term of
six months commencing on the date hereof.
3.3 The Company shall have the option (the "Option") to buy back the
Initial Shares, the Warrant and/or any Warrant Shares, from the Consultant for a
purchase price of $160,000 provided such Option may only be exercised in the
event the Company has not, within six months from the date hereof, completed the
sale of equity and/or obtained financing (as defined herein) in a minimum amount
of $1,000,000. Notwithstanding the foregoing, the Option may not be exercised if
the Company, within a period of six months from the date hereof, has rejected an
offer to purchase equity or provide financing based upon a pre money valuation
of the Company of not less than $7,000,000(2). For purposes of this section, the
term "financing" shall mean either a loan fully or partially convertible into
equity (at a conversion rate based upon a pre money valuation of not less than
$7,000,000), and/or a loan which requires the issuance of warrants to the lender
(exercisable at a price based upon a pre money valuation of not less than
$7,000,000). The Option may be exercised by written notice to the Consultant and
by delivery of the aforesaid Option purchase price during the option exercise
period which shall commence six months from the date hereof and shall end nine
months from the date hereof.
3.4 The Consultant shall have two demand and unlimited piggyback
registration rights with respect to the Initial Shares, the Warrant and the
Warrant Shares.
4. Covenants. As further consideration to the Consultant for its
execution of this Agreement, the Company, and its parent company, Xxxx
Solutions, Inc. ("MSI") covenant and agree as follows:
(i) MSI shall either subordinate all outstanding indebtedness owed
by the Company to MSI to any initial round of financing (as
that term is defined in Section 3.2) or capitalize such debt;
(ii) For the term of this Agreement, Consultant shall have the right
to designate one member of the Board of Directors of MSI and
one member of the Company's Board of Directors (or to designate
a representative to attend all meetings of such boards as an
observer);
(iii)The Board of Directors of the Company shall initially consist
of one director designated by the Consultant, Xxxx Xxxxxxx, Xxx
Xxxxxxxx and two directors designated by MSI.
5. Expenses. The Company shall reimburse the Consultant for all of its
reasonable and pre-approved travel and other out-of-pocket expenses
incurred in connection with its engagement hereunder.
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(2) Such valuation shall be based upon an assumption that all debt of the
Company to its parent company (and/or other inter company debt) has been
capitalized.
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6. Relationship. Nothing herein shall constitute Consultant as an
employee or agent of the Company, except to such extent as might hereinafter be
agreed upon for a particular purpose. Except as might hereinafter be expressly
agreed, Consultant shall not have the authority to obligate or commit the
Company in any manner whatsoever.
7. Confidentiality. Except in the course of the performance of its
duties hereunder, Consultant agrees that it shall not disclose any trade
secrets, know-how, or other proprietary information not in the public domain
learned as a result of Consultant's services to the Company unless and until
such information become generally known or unless compelled to do so pursuant to
subpoena or court order.
8. Information; Notice of Events. The Company recognizes and confirms
that the Consultant will be using information provided by or on behalf of the
Company in connection with the performance of its duties under this Agreement,
and that the Consultant does not assume any responsibility for and may rely
upon, without independent verification, the accuracy and completeness of any
such information. The Company hereby warrants that any information relating to
the Company that is furnished to the Consultant by or on behalf of the Company
will be fair, accurate and complete and will not contain any material omissions
or misstatements of fact.
9. Indemnity. The Company shall indemnify the Consultant from liability
it may incur in connection with the performance of its duties hereunder to the
extent that such liability is a result of false information provided to the
Consultant by the Company.
10. Assignment. The Agreement shall not be assignable by any party
(except to successors to all or substantially all of the business of either
party) for any reason whatsoever without the prior written consent of the other
party, which consent may be arbitrarily withheld by the party whose consent is
required.
11. Governing Law; Submission to Jurisdiction. This Agreement shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State. The
Company and Consultant hereby irrevocably and unconditionally consent to submit
to the exclusive jurisdiction of the courts of the State of New York and of the
United States of America located in the State of New York, City of New York, for
any action, suits or proceedings arising out of or relating to this letter and
the transactions contemplated hereby (and agree not to commence any actions,
suits or proceeding relating thereto except in such courts, and further agree
that service of process for any action, suit or proceeding brought against the
Company or the Consultant, as the case may be, in any such court. The Company
and Consultant also hereby irrevocably and unconditionally waive any objection
to the laying of venue of any action, suit or proceeding arising out of this
letter or the transactions contemplated hereby, in the courts of the State of
New York or the United States of America located in the State of New York,
County of New York and hereby further irrevocably and unconditionally waive, and
agree not to plead a claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
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12. Miscellaneous. This letter (a) incorporates the entire understanding
of the parties with respect to the subject matter hereof and supersedes all
previous agreements should they exist with respect thereto, whether written or
oral, (b) may not be amended, modified or waived except in a writing executed by
the Company and the Consultant and their respective successors and assigns. This
letter may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original for all purposes, but all such
counterparts together shall constitute but one and the same instrument. Delivery
of an executed counterpart of this letter by facsimile shall be equally
effective as delivery of an executed original counterpart of this letter.
Please confirm that the foregoing is in accordance with your understanding
and agreement with the Consultant by signing and returning to us a copy of this
letter, which shall become our binding agreement upon our receipt.
We are delighted to accept this engagement and look forward to working with
you on this assignment.
Very truly yours,
SHERLEIGH ASSOCIATES LLC
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: President
AGREED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
MARKCARE MEDICAL SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name: Xxxx Xxxxxxx
Title: PRES & CEO
AS TO SECTION 4
XXXX SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------
PRES & CEO
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