1
EXHIBIT 6.B
FEE AGREEMENT DATED THIS 30TH DAY OF AUGUST 1999
BETWEEN
Xxxxxxx.xxx Inc. a Nevada Corporation having an office at
Route de Jussy 00, XX 0000 Xxxxxx-Xxxxxx, Xxxxxxxxxxx
(Herein the "Company")
AND
Capital House A Finance And Investment Corporation a Canadian
company having an office at 00 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxx X0X 0X0
(Herein "CH")
WHEREAS:
i. The Company is a company whose common shares currently are quoted for
trading on the Over The Counter Bulletin Board in the U.S.; and
ii. The Company desires to obtain equity and debt financing ("Financing" as
defined below) and to enter into certain transactions ("Transactions" as
defined below); and
iii. CH represents that it has the ability to advise and to assist certain
Financing(s) and Transactions.
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties agree as follows:
1. DEFINITION OF FINANCING
"Consideration" means the aggregate value of all cash, securities, the
assumption of debt by the Target or the Company and any other forms of payment
received or to be received, directly or indirectly, by the Target or the Company
or the shareholders of the Target or the Company pursuant to a Transaction
including the total of all interest-bearing indebtedness of the Target or the
Company (both long term and short term including capitalized leases)
outstanding, assumed or refinanced at the closing of a Transaction and also
including any infusions of cash, securities, assets or other forms of value into
the Target or the Company pursuant to a Transaction. The term "Consideration"
expressly includes the amount paid for all options and warrants assumed or
purchased in connection with a Transaction; (ii) all payments to the existing
officers, directors and employees of the Target or the Company, including, but
not limited to, cash, securities, options and warrants paid in connection with a
Transaction, as well as amounts paid pursuant to consulting agreements,
non-competitive agreements, employment agreements and all other agreements
entered into in connection with a Transaction provided that such consulting,
non-competitive and employment agreements represent no less than 5% of the total
Consideration; and (iii) any letters of credit, standby letters of credit and
other types of third part guarantees used to secure indebtedness or otherwise as
a form of payment (regardless of whether any underlying indebtedness is repaid
as part of the Transaction), subject to the proviso that there will be no double
counting of any forms of value or of payment in calculating the Consideration
including, but not limited to, the definition of consideration above. The value
of all option and warrants
2
included as part of Consideration will be determined by mutually acceptable
techniques between the Company and CH. If part or all of the Consideration is
represented by securities, the value thereof for the purpose of computing the
Transaction Fee shall be determined as follows:
(xx) For securities which are publicly traded prior to the consummation
of such Transaction, the average last sale price for such
securities for the twenty trading day prior to the consummation of
such Transaction;
(yy) for newly-issued, publicly-traded securities, the average last sale
price for such securities for the first ten trading days subsequent
to the consummation of such Transactions, with such portion of the
Transaction Fee being payable the eleventh trading day subsequent to
the consummation of such Transaction; and
(zz) for securities for which no market exists, the mutual agreement of
the Company and CH as determined prior to the closing of such
Transactions.
If part of the Consideration is contingent upon the occurrence of some
future event (e.g., the realization of earnings projections), then such
portion of the Transaction Fee shall be paid by the Company to CH upon the
earlier of the determination or receipt of such Consideration.
1.2 "Financing" means the gross proceeds or gross value of any equity
financing or debt financing or other forms of financing including but not
limited to limited partnerships arranged by or through CH for the Company
within 24 months of the termination or completion of this agreement by
sources introduced by CH to the Company. Notwithstanding the generality of
the foregoing, it is understood and agreed that Financing shall be limited
to a private placement of common or preferred stock of the Company
("Securities") and includes:
i. any common or preferred stock of the Company issued in connection
with the acquisition of or merger with another company;
ii. any common or preferred stock of the Company issued in connection
with the acquisition of any technology or other assets.
1.3 "Target" means any person, group of persons, partnership, joint venture,
corporation or other entity, including subsidiaries, operations and assets
thereof other than those of the Company, that is part of a "Transaction".
1.4 "Transaction" means (a) any merger, consolidation, reorganization,
recapitalization, business combination or other transaction pursuant to
which a Target or a material subsidiary or other business unit of a Target
acquires, is acquired by, or combined with, the Company or (b) the
acquisition, directly or indirectly, of or by the Company (or by one or
more persons acting together with the Company pursuant to a written
agreement or otherwise), in a single transaction or a series of
transactions, (i) all or substantially all of the assets of a Target or of
the Company or a material subsidiary or other business unit of a Target or
of the Company or (ii) fifty percent or more of a Target's, or of the
Company's, outstanding common stock (whether by way of tender or exchange
offer, open market purchases, negotiated purchases or otherwise).
2
3
2. CONSULTATIVE SERVICES
The Company hereby engages CH as the Company' financial advisor
("Financial Advisor") with respect to a proposed Financing on a private
placement basis or Transaction. CH shall provide such consultative
services in respect of any Financing or Transaction as may reasonably be
required by the Company but, it is expressly understood and agreed, that
the acceptance of the terms of any Financing or Transaction shall be
within the sole discretion and control of the Company.
3. FEES & EXPENSES
As compensation for providing the services described hereunder, the
Company agrees to pay CH:
3.1 A Retainer Fee of $5,000 U.S. per month, payable quarterly in
advance on the first day of each calendar quarter during the term
hereof provided that the Retainer Fees payable in respect of the
current quarter shall be deemed to be $7,500 in total and shall be
paid upon the execution thereof;
3.2 All reasonable out-of-pocket expenses incurred by CH from time to
time pursuant to the performance of its services hereunder, provided
that the Company shall not be liable for expenditures in excess of
$5,000 U.S. per calendar quarter unless the Company has approved the
expenditures in excess of that amount prior to their being incurred
by CH;
3.3 A cash success fee (the "Success Fee") of 5% of each Financing
payable at the closing of each Financing directly to CH out of the
proceeds of the Financing;
3.4 The Company agrees to pay CH a transaction fee (the "Transaction
Fee") as a percentage of the Consideration of any Transaction equal
to:
(i) 1.5% of up to and including $50 million of Consideration;
(ii) 1.25% of Consideration between $50 million and $100 million;
(iii) 1.0% of Consideration in excess of $100 million.
3.5 If a Transaction is not consummated, but instead the Company
acquires any subsidiary, business segment or operation, division,
assets or securities of the Target, not constituting a Transaction
as set forth above, or the Target acquires any subsidiary, business
segment or operation, division, assets or securities of the Company
(an "Alternate Transaction"), a cash fee calculated in accordance
with the fee schedule set forth in subparagraphs 3.4.
3.6 Warrants for 390,000 shares of Common Stock of the Company at an
exercise price of $3.00 per share and with provisions for cashless
exercise. The issuance and exercise of the warrants are to be
pursuant to Regulation S as promulgated under the Securities Act of
1933.
3.7 If the Company requests CH to assist in arranging a transaction or
perform investment banking services that are not otherwise covered
by the provisions of this Agreement and CH agrees to assist in
arranging such transaction or perform such investment banking
services, the Company agrees to pay CH mutually acceptable
3
4
compensation taking into account, among other things, the results
obtained and the custom and practice among investment bankers acting
in similar transactions.
Notwithstanding the foregoing, the Retainer Fees and the Warrants shall be
deemed to be earned upon receipt by CH but no Success Fee or Transaction
Fee shall be payable to CH unless and until: (a) the proceeds of the
Financing are payable to or by the Company; or (b) the Consideration for
any Transaction is payable to or by the Company or its shareholders.
4. COMPLIANCE WITH SECURITIES LAWS
The Company will not make any offer or sale of any securities of the same
or similar class as the Securities, or take any action, the result of
which would cause the offer and sale of the Securities to fail to be
eligible for offer and sale pursuant to the provisions of Regulation D or
Regulation S promulgated pursuant to the Securities Act of 1933 (the
"Act") and will comply with all provisions of Regulation D or Regulation S
applicable to the offering of the Securities.
5. INDEMNIFICATION
The Company shall jointly and severally indemnify CH and associated
companies, its directors, officers, shareholders and employees and hold
them and each of them harmless against any loss, liability or expense
incurred by them or any of them arising out of or in connection with the
exercise or performance of any of CH's obligations, powers or duties under
this Agreement excepting only those acts or omissions taken or performed
in bad faith or with gross negligence of CH.
CH shall indemnify and save harmless the Company, its officers, directors,
shareholders and employees, as well as its subsidiaries, and their
respective officers, directors and employees, against any and all claims
or demands for fees, costs, expenses or other payments made from or by any
Funder or any third party pursuant to any agreement with CH with respect
to any Financing provided by any of the Funders.
The rights of indemnification hereunder shall survive the termination of
this agreement or the discharge of the CH hereunder.
6. BEST EFFORTS
It is understood that CH's commitment under this Agreement is to use CH's
best efforts throughout the period that CH serves as the Company'
exclusive Financial Advisor as set forth herein. CH's commitment is not
intended to provide any assurance that any Financing or Transaction will
be consummated. In the event that any Financing or Transaction is not
consummated during the period of time CH acts as the Company's Financial
Advisor and the Company consummates a Financing or Transaction within 12
months thereafter with a source introduced by CH to the Company, the
Company agrees to pay CH the Success Fee or Transaction Fee, respectively.
7. CONFIDENTIALITY
The Company will furnish CH with such information as CH may reasonably
request for CH's use in connection with any Financing or Transaction. The
Company recognizes and confirms that (i) CH will use and rely primarily on
the information furnished to CH by the Company and on information
available to CH from generally recognized public sources without having
4
5
independently verified the same and (ii) CH does not assume responsibility
for the accuracy or completeness of said information. The Company hereby
represents and warrants the information furnished by it to CH, taken as a
whole, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not false
or misleading. The Company further agrees that it will immediately notify
CH of the occurrence of any event or circumstance that results in the
above representation regarding such information not continuing to be true
during the entire term of CH's engagement hereunder.
CH shall keep this agreement and the fact of the Company's negotiations
for any Financing or Transaction and any information or documentation
about or received from the Company strictly confidential as between CH and
the Company until such time as and to the extent only that it becomes
publicly available otherwise than by a breach of this or any other
confidentiality agreement to which the Company is a party. CH acknowledges
that breach of this obligation will cause irreparable harm to the Company
that may not be compensable in damages and agrees that, without limitation
to any other right or remedy to which the Company may otherwise be
entitled in consequence thereof, such breach may be restrained by
injunction without proof of actual damage.
8. TERM.
The term of this Agreement shall commence on the date hereof and end
twenty four (24) months thereafter. Notwithstanding the foregoing, either
party may terminate this Agreement at any time prior to the end of the
twenty four month period by giving the other party at least thirty (30)
days prior written notice of such termination, at which time the Company
shall pay to CH all fees earned and all reasonable expenses incurred to
the date of such termination, subject to and in accordance with paragraphs
3 and 5 hereof, respectively. Upon termination of this Agreement, any
periodic Retainer payments payable following termination will cease to be
payable to CH. The Company agrees to pay CH any fees specified in
paragraph 3 if the events specified therein shall occur during the term of
this Agreement or if any source of financing is identified during the term
of this Agreement but a Financing or Transaction is consummated within 12
months after the termination or expiration of this Agreement. Any
obligation pursuant to paragraph 3 shall survive the termination or
expiration of this Agreement. This Agreement may be renewed upon mutual
written agreement of CH and the Company.
9. TOMBSTONES
All tombstones, announcements or other marketing materials used by CH with
respect to any Financing or Transaction in which the Company's name is
used shall be approved by the Company in advance of their release and such
approval shall not be unreasonable withheld.
10. NON-ASSIGNABLE
This agreement shall not be assignable by CH, unless to associated
companies, without written approval by the Company and any assignment
purported to be made by CH in violation of this provision shall be void
and of no effect.
5
6
11. COMPLETE AGREEMENT
This agreement contains the complete agreement between the parties and
replaces and supercedes all oral or written agreements, understandings or
representations made by either party to the other prior to or
contemporaneous with this agreement.
12. AUTHORITY
Neither party has the authority to bind the other or hold itself out as
having the authority to bind the other or to make any representations or
to execute any document, including general correspondence, on behalf of
the other.
13. COUNTERPARTS & TELEFACSIMILE
This agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original and all of which shall constitute one
agreement. A telefacsimile of this Agreement may be relied upon as full
and sufficient evidence as an original.
14. JURISDICTION
This agreement shall be governed by the laws of the province of Ontario,
Canada.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT THIS 30TH DAY OF
AUGUST 1999.
CAPITAL HOUSE A FINANCE. XXXXXXX.XXX INC.
AND INVESTMENT CORPORATION
/s/ XXXXX XXXX /s/ Xxxx Xxxxxx Xxxxxx
----------------------- -----------------------
PER: XXXXX XXXX PER: XXXX XXXXXX XXXXXX
/s/ Xxxxxx Xxxxxxxx
-----------------------
PER: XXXXXX XXXXXXXX
