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Exhibit 10.35
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Carnegie International Corporation
NASD OTC BB: CGYC
11350 McCormick Road
Executive Plaza III, Suite 1001
Hunt Valley, Maryland 21031
410-785-7400: Fax: 410-785-7415
E-mail: [email protected]
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Website: www.carnegieint.com
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September 15, 2000
Williams Rosen & Wall, LLC
P.O. Box 351
Cockeysville, Maryland 21030
Attn: Michael J. Edison, Executive Manager
Gentlemen:
This letter of intent (the "Letter of Intent") is intended to set forth the
basic terms upon which Carnegie International Corporation, a Colorado
corporation ("Carnegie") and Williams Rosen & Wall, LLC, a Delaware limited
liability company ("WRW") will enter into definitive agreements (the "Definitive
Agreements") for the sale by Carnegie to WRW of ten (10) investment units (the
"Units") consisting of 600,000 shares of common stock, no par value, to be
issued by Carnegie (the "Common Stock"), and 170,000 warrants to purchase Common
Stock of Carnegie, and related transactions upon the terms and conditions
contained in this Letter of Intent.
1. Securities Law Status. WRW is a privately held Delaware limited
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liability company.
Carnegie is a publicly traded company and its shares of common stock
trade on the NASDAQ OTC Bulletin Board in the over the counter market under the
symbol "CGYC." Carnegie is subject to the Securities Act of 1933 (the
"Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act").
2. Structure of Transaction. The transaction shall be a sale (the
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"Sale") of the Units by Carnegie to WRW, as follows:
2.1 Purchase of Common Stock. Carnegie shall to WRW and WRW shall
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purchase from Carnegie ten Units, aggregating 6,000,000 shares of Common Stock
(the "Shares"), together with the Warrants described below, for the purchase
price of Three Million Dollars ($3,000,000), which purchase price shall be paid
in full, by wire transfer or certified or bank check, at the Closing. The sale
and delivery of the Common Stock by Carnegie to WRW will, as of the Closing have
been duly authorized by all requisite corporate of Carnegie and when issued,
sold and delivered in accordance with the Definitive Agreements, and upon
payment therefor, the Shares will be validly issued and outstanding, fully paid
and nonassessable.
2.2 Warrants. In connection with the purchase of the Units,
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Carnegie will issue to WRW Warrant Certificates (the "Warrant") to purchase an
aggregate 1,700,000 shares of Common Stock. The Warrant may be exercised at any
time prior to October 1, 2005, at an exercise price of twenty-four cents ($0.24)
per share of Common Stock on a cash payment basis by WRW.
3. Closing. The parties contemplate that the closing of the Sale (the
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"Closing") shall occur on or before October 5, 2000, and the closing of any
related transactions shall occur at a mutually acceptable date, time and place.
4. Additional Financing. Carnegie and WRW recognize Carnegie's' need for
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additional future financings and agree as follows:
4.1 Financing Commitment. WRW hereby commits to provide additional
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financing ("Additional Financing") to Carnegie in installments of $1,000,000
each, up to the aggregate amount of $5,000,000 with each installment to be made
by WRW within ten (10) days following the date (the "Trigger Date") on which (i)
the Common Stock trades at $2.00 or more, determined with reference to the
average closing price of the Common Stock over a ten (10) consecutive trading
day period (the "Average Trading Price"), and (ii) as of the Trading Date, the
average trading volume of the Common Stock for the twenty (20) trading days
prior thereto equals or exceeds 150,000 shares per day on the OTC Bulletin Board
or a comparable trading volume on any other national exchange. WRW shall be
obligated to fund an installment of Additional Financing only once in any ninety
(90) day period for a period extending two (2) years from the Closing.
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Each installment of Additional Financing will be made by WRW's purchase of
Common Stock at a purchase price equal to the greater of (i) $1.85 per share, or
(ii) eighty-five percent (85%) of the Average Trading Price. Carnegie shall pay
a consulting fee on each installment of Additional Financing as described in
Paragraph 8 hereof.
4.2 Right of First Refusal. During the two (2) year period beginning
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on the Closing, Carnegie shall advise WRW by written notice of any equity
financing (including but not limited to sales of preferred stock, common stock,
other securities and debt instruments which are convertible into securities of
Carnegie) which it proposes to secure and the proposed terms of such financing.
WRW shall advise Carnegie in writing, within seven (7) business days following
WRW's receipt of Carnegie's written notice, as to whether WRW will commit to
provide such equity financing. If WRW commits to provide such equity financing,
it shall provide such equity financing on the same terms and conditions
(including the closing date) set forth in Carnegie's written notice to WRW. If
WRW declines to provide equity financing or fails to respond to Carnegie's
written notice within the specified period, then Carnegie may proceed to secure
such equity financing from third parties on substantially equivalent terms as
those set forth in Carnegie's written notice to WRW. Carnegie shall pay a
consulting fee on each installment of equity financing as described in Paragraph
8 hereof.
5. Registration Rights. Carnegie and WRW shall enter into a Registration
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Rights Agreement which will provide to WRW (i) at any time after January 1, 2001
and for a period of three (3) years thereafter, upon the request of the holders
of a twenty percent (20%) or more of the Shares, a demand registration right for
three long-form demand registrations covering the Shares, any shares of Common
Stock, provided that a demand may be made only once in any six (6) month period,
and (ii) at any time unlimited piggyback registration rights, except that the
underwriter would have the right to limit the shares of Common Stock to be sold
so market price is not adversely affected. The registration rights shall be at
Carnegie's expense.
6. Representations and Warranties. In the Definitive Agreements,
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Carnegie and WRW shall each warrant and represent to the other party all such
matters as are ordinary and customary in transactions of this nature and scope
including, without limitation, warranties and representations as to valid
formation and status, authorization of the transaction, title to assets of each
party, the absence of any known event or circumstance which would be or result
in material adverse change in the business or operations of each party,
confirmation as to the liabilities and obligations of each party, the accuracy
and validity of the financial statements of each party, the accuracy of the tax
returns of each party, the absence of any litigation or pending claims against
each party, the compliance of all applicable laws by each party in the conduct
of its business operations, the payment of any and all required taxes on the
part of each party, confirmation as to employment contracts, personnel and
collective bargaining agreements affecting the operations of each party, the
maintenance of appropriate insurance coverages upon the assets of each party and
the accuracy and validity of any and all material agreements and obligations of
each party.
7. Conditions Precedent. The obligations of each party to effect the
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Sale and the other transactions described herein shall be subject to the
conditions precedent that: (i) the Definitive Agreements shall have been
approved and adopted by each party, (ii) no statute, rule, regulation, executive
order, decree, ruling or order shall have been enacted, entered, promulgated,
enforced or issued by any court or governmental authority of competent
jurisdiction which prohibits, restrains, enjoins or restricts the consummation
of the Sale or any of the other transactions described herein, (iii) all
material representations and warranties of each party shall be true and correct
in all respects as of the Closing, (iv) all agreements and covenants to be
performed or complied with by each party shall have been conformed or complied
with in all material respects as of the Closing, and (v) the other transactions
described herein shall have been taken or occurred.
8. Brokers and Commissions. Pursuant to the provisions of a Consulting
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Agreement by and between Carnegie and Edison & Co., Inc., a Delaware corporation
("Edison"), Carnegie shall be obligated to pay to Edison a consulting fee equal
to six percent (6%) of the purchase price of the Shares at the Closing, which
consulting fee may be payable, at the option of Carnegie, in cash or in Common
Stock at a per share price equal to the ten day trading average of the closing
price for the period ending two days prior to the Closing. Excepting the
consulting fee to Edison described above, no broker, investment banker, finder,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Letter of Intent based upon arrangements made
by or on behalf of either Carnegie or WRW and each of Carnegie and WRW shall
indemnify, defend and hold harmless the other party from and against any such
fee or commission.
9. Indemnifications. The Definitive Agreements shall include mutual and
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reciprocal indemnifications of each of Carnegie and WRW by the other party as
are customary and usual in transactions of this nature and scope.
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10. Conduct of Business. From and after the date of this Letter of Intent
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and until the earlier to occur of the termination of this Letter of Intent or
the Definitive Agreements or the Closing, each of Carnegie and WRW shall at all
times carry on its business and activities in its day to day business operations
as currently conducted, shall not acquire or dispose of any assets used in its
business operations other than in the ordinary course of business as currently
conducted and consistent with past practice and, to the extent consistent
therewith, shall use all reasonable efforts to preserve intact their current
business organizations, key employees and personnel and relationships with those
persons having business dealings with them.
11. Due Diligence; Access to Information. Each of Carnegie and WRW shall
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afford to the other party, and to the officers, employees, accountants, counsel,
financial advisors and other representatives of such party, reasonable access
during normal business hours to all their respective properties, books of
record, contracts, commitments, personnel and records for a period extending up
to the Closing (the "Due Diligence Period"), and, during such period, each of
Carnegie and WRW shall furnish promptly to the other party all information
concerning its business, properties and personnel as such other party may
reasonably request from time to time.
12. Best Efforts Undertaking. Each of the parties to this Letter of
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Intent agree to use best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other party in
doing all things necessary, proper or advisable to consummate and make effective
the Sale and the other transactions contemplated by this Letter of Intent.
13. Fees and Expenses. Each party to this Letter of Intent shall be
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responsible for any and all fees and expenses, including, without limitation,
professional fees payable to attorneys and accountants, which they incur in
connection with the transactions described herein, regardless of whether or not
the Definitive Agreements are executed.
14. Public Announcements. Carnegie and WRW will consult with each other
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before issuing, and provide each other the opportunity to review, comment upon
and concur with and use reasonable efforts to agree on, any press release or
other public statement with respect to the transactions contemplated by this
Letter of Intent, including the Sale, and shall not issue any such press release
or make any such public statement prior to such consultation, except as either
party may determine is required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
15. Termination. The obligations of the parties under this Letter of
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Intent may be terminated: (i) by mutual written consent of Carnegie and WRW,
(ii) by either party if the Sale shall not have been consummated by October 5,
2000, (iii) by either Carnegie or WRW if the other party shall have breached or
failed to perform in any material respect any of the obligations or agreements
set forth in this Letter of Intent.
16. Amendment. This Letter of Intent may be amended by the parties by
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mutual agreement at any time prior to entry into the Definitive Agreements.
17. Definitive Agreements. Following the execution of this Letter of
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Intent, each of the parties to this Letter of Intent agrees to use its best
efforts to negotiate and enter into Definitive Agreements regarding the Sale
(the "Definitive Agreements"), as well as any and all ancillary documents to
document and effect the Sale and any and all transactions contemplated by this
Letter of Intent. The Definitive Agreements shall be terminable as set forth in
this Letter of Intent in the paragraph regarding Termination as above set forth.
Further, if the parties to this Letter of Intent are unable to execute the
Definitive Agreements by October 5, 2000, then the obligation to proceed with
the Sale shall terminate and be of no further force and effect.
18. Governing Law. This Letter of Intent shall be governed by and
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construed in accordance with the laws of the State of Maryland, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
19. Binding Effect. The paragraphs of this Letter of Intent are intended
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to be and are binding agreements of the parties hereto and binding upon the
parties hereto.
20. Counterparts. This Letter of Intent may be executed in two (2) or
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more counterparts, each of which shall be deemed to be an original instrument,
but all of which counterparts when taken together shall constitute one
agreement.
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If the terms of this Letter of Intent are acceptable to you, please
acknowledge your acceptance where indicated below.
Sincerely yours,
Carnegie International Corporation,
a Colorado corporation
By: /S/ Lowell Farkas
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Lowell Farkas, President and
Chief Executive Officer
The terms of the foregoing Letter of Intent are hereby accepted as of this
15th day of September, 2000.
WILLIAMS ROSEN & WALL, LLC,
By: /s/ Michael J. Edison
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Michael J. Edison, Executive Manager
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