EXHIBIT 10.6
CYGNI CAPITAL LLC
170 Newport Center Drive, Suite 220
Newport Beach, CA 92660
May 10, 2004
(Via Fax)
Matt Kerper
President
Whitelight Technologies, Inc.
170 Newport Center Dr.
Suite 220
Newport Beach, CA 92660
Dear Matt,
As a result of our meetings and conversations, and as per your request, the
purpose of this letter is to propose the engagement of Cygni Capital LLC
and Alan Knitowski's company, Ecewa Capital LLC, (collectively "Cygni") by
Whitelight Technolgoies, Inc., (the "Company") on a non-exclusive basis for
a period of twelve (12) months, to render business development and
corporate finance services.
1. Engagement of Cygni: The Company hereby engages Cygni and Cygni
hereby agrees to render services to the Company as a business development
and corporate finance consultant.
2. Scope of Engagement: The Company desires that Cygni provide advice
and consultation to the Company, regarding general business and corporate
finance issues and planning, including but not limited to the following:
a. corporate organization and structure;
b. strategic alliances, mergers and acquisitions;
c. private and public equity and debt financing;
d. due diligence;
e. capital sources and the formation of financial transactions;
f. corporate finance methods and systems;
g. guidance and assistance in available market alternatives to
maximize Company shareholder value;
h. outsourcing solutions;
i. advise and consultation in regulatory filings;
j. obtain market maker sponsorship for quotation on the OTC Bulletin
Board.
Specifically, Cygni will act as Corporate Financial Consultant to the
Company, for the purpose of (i) advising the Company on its corporate
structure, business opportunities, private and public financing
alternatives, and (ii) advising the Company on structuring and funding an
anticipated initial Private Offering for 2,000,000 shares of common stock
at $0.75 per share (the "Offering") to fund the Company and (iii) filing a
registration with the SEC ("Registration") which will qualify the Company
as a fully reporting, trading, company quoted on the OTC Bulletin Board, as
follows:
Chronology. The exact timing of any registration will, of course, be
subject to certain events that are only partially under our mutual
control, such as, the time it takes to audit the Company's Financial
Statements, the time it takes to prepare and fund the Offering, the
time it takes for counsel to prepare registration documents and/or
reorganization documents and proxy statement, the time it takes for
shareholder approval of the Registration by the
Matt Kerper
President
Whitelight Technologies, Inc.
May 10, 2004
Page 2
Company, and the time it takes for certain regulatory submittals post
Registration. The Registration can only be filed after the Offering
is completed. However, it takes approximately 60 days for the SEC to
review and respond to any registered filing, after which there may be
further delays dependent upon the time it takes for the Company to
respond to any SEC inquiries or requests for further information.
Specifically, the chronology of events should be as follows:
i. Preparation and Funding of any Private Offering;
ii. Preparation and Filing of the Registration Statement;
iii. File an S-2, SB-2 or S-4 Registration to register the Company's
common stock;
iv. NASD trading application.
Funding. Cygni will arrange for not less than $200,000 in funding to
the Company from the Trymetris Capital Fund I, LLC under terms and
conditions to be negotiated and acceptable to the Company.
The Financial Services shall be provided to the Company in such form,
manner and place as the Company reasonably requests. Cygni shall not, by
this Agreement, be prevented or barred from rendering services of the same
or similar nature, as herein described, or services of any nature
whatsoever for, or on behalf of, persons, firms, or corporations other than
the Company, whether or not they are competitors of Company. Cygni does
not guarantee that its efforts will have any impact upon the Company's
business, or the business of the Company's clientele, or that there will be
any specific result or improvement from Cygni's efforts. Cygni acknowledges
and agrees that confidential and valuable information proprietary to the
Company and/or the Company's clientele obtained during its engagement by
the Company, shall not be, directly or indirectly, disclosed without the
prior express written consent of the Company, unless and until such
information is otherwise known to the public generally or is not otherwise
secret and confidential.
Solely at your option, Cygni, or an affiliate or designated assignee, is
also available to perform certain corporate and investor relations services
for the Company, on a term or month-to-month basis subsequent to the
Registration at a fee and under terms to be negotiated. However, we suggest
that you budget not less than $15,000 per month for such expenses. The
investor relations services shall include advice and consultation on all
media, marketing and investor relations materials, assistance in
preparation of press releases for your approval, and preliminary handling
through our offices of media and investor inquiries, relations with its
securities holders and introductions to institutional investors. In
addition, Cygni would assist the Company in obtaining increased sponsorship
of additional market makers and will also become involved with the
placement of blocks of the Company's stock, should any become available for
sale. In conjunction with its other activities for the Company, Cygni will
assist the Company in obtaining additional research coverage from other
broker/dealers and independent analysts.
The Company hereby recognizes and agrees that it has not engaged Cygni as a
placement agent or underwriter in connection with the services set forth
herein and that Cygni will not act as a placement agent or underwriter,
will not participate in negotiations between the Company and potential
buyers of the Company's stock, and that Cygni is not a NASD/SEC registered
Matt Kerper
President
Whitelight Technologies, Inc.
May 10, 2004
Page 3
party. The parties herein agree that Cygni is not acting as an agent,
representative, or employee of the Company in performing the services set
forth herein. Cygni shall make no representations nor disseminate any
information concerning the Company other than information supplied by the
Company an/or that is then currently available to the public. The Company
agrees to indemnify and hold harmless Cygni for claims, losses, charges,
fees (including reasonable attorney's fees), expenses and liabilities
arising out of this Agreement or the Company's actions in connection with
the Cygni's services herein.
3. Term: This Agreement shall terminate twelve (12) months from the date
of execution hereof. This Agreement will automatically renew for an
additional six (6) month term, unless otherwise notified in writing, by
means of a notice of intent not to renew, at least 30 days prior to the
expiration of the Agreement. After the initial twelve (12) month term, this
Agreement may be terminated by either party on thirty (30) days prior
written notice.
4. Fees:
a. Cash:
i. Upon execution of this Agreement, and every thirty (30) days
thereafter until termination Cygni shall be paid a monthly
fee in advance of $10,000.
ii. Concurrent with the completion of any transaction
("Transaction"), other than the Offering referred to herein,
and in further consideration of its consulting services, the
Company agrees to compensate Cygni by payment of a Finder's
Fee ("Fee") of eight percent (8%) of the funds raised in
connection with the Offering contemplated herein. An escrow,
trust or similar third party agent will be used for each
closing to which Cygni shall be a party, and any and all
consideration due Cygni shall be paid to Cygni directly
therefrom. In addition the Fee shall include five (5) year
warrants (the "Warrants") for the purchase of an equity
interest of the Company equal to eight (8%) of the
securities subject to the Transaction, including but not
limited to securities issued, or to be issued through
exercise of a convertible instrument and/or exercisable
warrants. These Warrants shall be exercisable at the per
share price of securities sold in the Offering and shall
contain price anti-dilution provisions. The shares
underlying the Warrants will have standard demand
registration and piggyback rights and a cashless exercise
provision.
The Fee shall be based upon the Consideration earned or paid
upon completion of a Transaction within the six-month period
after the date this Agreement has been signed by both you
and Cygni. The Fee will be paid immediately at the time the
investment is made. Cygni shall not be entitled to any Fee
if a Transaction is not completed.
A Transaction shall include any single transaction or series
of combinations of transactions, other than in the ordinary
course of trade or business whereby, directly or indirectly,
control of an interest of the Company or any of its
businesses or assets is transferred for Consideration (as
defined below) to any other party, their nominees, assignees,
or affiliates. A Transaction shall include, without limitation,
a sale or exchange of capital stock or assets, loans,
guarantees or assumption of indebtedness, leases of assets with
or without purchase options, a merger or
Matt Kerper
President
Whitelight Technologies, Inc.
May 10, 2004
Page 4
consolidation, a tender or exchange offer, leveraged buyout,
the formation of a joint venture, minority investment or
partnership or any similar transaction. Consideration shall
mean the sum of (i) cash, (ii) market value of securities or
interests, and (iii) indebtedness for money loaned or
borrowed (including guarantees and pension liabilities)
assumed in connection with a Transaction.
All forms of compensation set forth in this subsections are
payable to Cygni with respect to any completed Transaction,
by and between the Company and any person or entity and
their affiliates having previously met with, spoken to
and/or introduced by Cygni, for the period from the
execution date of this Agreement through the end of the 12th
month following the termination date of this agreement,
after giving effect to any and all extensions to this
Agreement.
5. Disclaimer of Responsibility for Acts of the Company: The obligations
of Cygni described herein are strictly limited to those of providing
Financial Services to the Company. In no event shall Cygni be required by
this Agreement to act as the agent of the Company or otherwise to represent
or make decisions for the Company. All final decisions with respect to
acts of the Company or its affiliates, whether or not made pursuant to or
in reliance on information or advice furnished by Cygni hereunder, shall be
those of the Company or such affiliates and Cygni shall under no
circumstances be liable for any expense incurred or loss suffered by the
Company as a consequence of such decisions.
6. Expenses: The Company is responsible for all costs related to any
Offering, which may include but are not limited to the preparation and
production of a PPM, legal fees, printing and reproduction costs,
accounting and other professional services, Blue Sky registration fees,
road show and travel related expense and miscellaneous out-of-pocket
expenses incurred in connection with this engagement. We estimate that your
legal fees for the registration filing with the SEC and NASD should not
exceed $50,000. The Company will be required to pay for all preapproved
Cygni expenses in excess of $500 in advance by either providing for direct
billing to the Company or Company's credit card. Any expenses incurred by
Cygni on behalf of the Company, related to this engagement will be invoiced
and due upon receipt.
7. Successors: This Agreement is binding upon the parties hereto and
their respective permissible assigns, successors, heirs and personal
representatives, and shall inure to their benefit.
8. Assignment: Neither this Agreement nor any right pursuant hereto or
interest herein shall be assignable by any of the parties hereto without
the prior written consent of the other parties hereto, except as expressly
permitted herein.
9. Governing Law: This Agreement shall be governed and construed and
enforced in accordance with the laws of the State of California applicable
to Agreements to be entered into and entirely performed in such State.
10. Costs and Attorneys' Fees: If any action, suit, arbitration
proceeding or other proceeding is instituted arising out of this Agreement,
the prevailing party shall recover all of such party's costs, including,
without limitation, the court costs and attorneys' fees incurred therein,
including
Matt Kerper
President
Whitelight Technologies, Inc.
May 10, 2004
Page 5
any and all appeals or petitions therefrom. As used herein, "attorneys'
fees" shall mean the full and actual costs of any legal services actually
rendered in connection with the matters involved, calculated on the basis
of the usual fee charged by the attorneys performing such services.
11. Waiver and Amendment: No waiver, amendment or modification of any
provision of this Agreement shall be effective unless consented to by both
parties in writing. No failure or delay by either party in exercising any
rights, power or remedy under this Agreement shall operate as a waiver of
such right, power or remedy. Any terms and/or conditions of this Agreement
may be waived at any time, pursuant to this section, but a waiver in one
instance shall not be deemed to constitute a waiver in any other instance.
12. Severability: In the event that any provision of this Agreement shall
be held to be invalid, illegal or unenforceable in any circumstances, the
remaining provisions shall nevertheless remain in full force and effect and
shall be construed as if the unenforceable portions were deleted.
13. Entire Agreement: This Agreement and any exhibits herein incorporated
and attached hereto supersede all prior and contemporaneous negotiations
and agreements (whether written or oral) and constitute the entire
understanding among the parties.
Please confirm that the foregoing correctly sets forth your understanding
of our agreement and return one executed copy of this Agreement within
seven (7) business days of the date of this letter to our office at 170
Newport Center Dr., Suite 220, Newport Beach, CA 92660, after which this
proposal shall be deemed withdrawn.
Regards,
/s/ Eric Chess Bronk
Eric Chess Bronk
Accepted and agreed to this 12th day of May 2004
WHITELIGHT TECHNOLOGIES, INC.
By: /s/ Matt Kerper
Matt Kerper, President