XXXXXXX X. XXXXXXX
Attorney at Law
0000 Xxxxxxxx Xxxx (000) 000-0000
Suite 200 (000) 000-0000
(Fax)
Charlotte, NC 28210 xxxxxxxx0@xxx.xxx
June 2, 2004
Privileged and Confidential
Xx. Xxxxxx Xxxxxxx, Xx.
Chairman
AmStar Mortgage Corporation
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
This letter agreement ("Agreement") confirms the terms and conditions of our
engagement by AmStar Mortgage Corporation ("Amstar" or the "Company") to render
certain legal and financial advisory services to the Company.
We have received and reviewed your Business Plan Executive Summary and certain
financial information. We understand that AmStar is a Texas corporation, formed
on October 12, 2002, actively engaged in the business of originating commercial
and mortgage loans and other lending services. We are informed that Amstar has
or intends to enter into an agreement with Xxxxxxxxxx.Xxx, Inc., a Nevada
corporation ("Peoplesway") designed to promote the Amstar brand and mortgage
services (the "Peoplesway Arrangement").
As a part of the Peoplesway Arrangement, Xxxxxx has agreed to use its reasonable
best efforts to register certain securities with the United States Securities &
Exchange Commission under the Securities Act of 1933, as amended. As a result,
you require certain financial consulting services pertaining to the legal,
accounting and trading market aspects of the intended transaction. To partially
fulfill your obligations thereunder, you have engaged us as legal counsel and
financial consultants on the terms set forth herein.
You have engaged our services to prepare or review Substantially all the
documentation to be submitted to regulatory authorities and distributed to
prospective investors, advise as to compliance requirements, assist in the
structure of the plan of corporate finance, and introduce the Company to
commercial and merchant banks, investment banks, private funds and other
financiers, all as may be necessary or appropriate.
Xx. Xxxxxx Xxxxxxx, Xx.
June 2, 2004
Page Two
1. Services. The services to be performed shall be on a reasonable best efforts
basis and may be briefly outlined as follows:
a. Preparation and drafting of a registration statement to be filed with
the United States Securities & Exchange Commission, certain state securities
regulatory commissions, and documents necessary to obtain listing on an exchange
or in a trading market;
b. Suitable corporate authorization, resolutions, minutes, and by-laws,
including any necessary amendments, change of domicile or associated filings;
c. Due diligence, document review, document preparation, attendance at
board and shareholder meetings, preparation of required shareholder notices and
related corporate work necessary to effect the filing;
d. Filing, review, preparation and/or submission of all exhibits required
by Regulation S-B;
e. Telephone conferences as needed with regulators, auditors,
underwriters, consultants and management; f. Related and associated conferences,
documents and other matters necessary to effect the filing.
g. Possible letters of intent, placement agent agreements or similar
requirements for ongoing corporate financing and/or investment banking
relationships.
h. Preparation of documents necessary for listing to the OTC Bulletin
Board;
i. Obtain CUSIP numbers, documents necessary for listings in manuals with
Standard & Poors;
j. Obtain CIK number and open Xxxxx account with the SEC;
k. Selection, assistance and application necessary to obtain a transfer
agency agreement with a duly qualified transfer agent;
l. Assistance in selection of company auditors, telephone consultation and
document review, and related services necessary to procurement of an audit by a
PCAOB certified auditor in compliance with Regulation S-X, including the costs
of an initial audit.
m. Introduction to broker/dealers, investor relations experts and other
persons; and Xx. Xxxxxx Xxxxxxx, Xx. June 2, 2004 Page Three
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Xx. Xxxxxx Xxxxxxx, Xx.
June 2, 2004
Page Three
n. Furnish such other legal counsel and financial advisory services
necessary or appropriate to consummate the intended transaction, including
structure and bylaws of an audit committee sufficient to maintain Xxxxxxxx-Xxxxx
Compliance.
2. Appearances by Xx. Xxxxxx. We understand that Peoplesway will make Xxxx
Xxxxxx, its Chairman, available for appearances and attendance at up to four (4)
AmStar sponsored events during the first year of this Agreement. Xx. Xxxxxx'x
appearances are expected to include such events as lectures, seminars or
meetings with prospects, joint venture arrangements, or communications to the
investment community. We each agree that Xx. Xxxxxx will be given at least 30
days advance notice and shall be subject to Xx. Xxxxxx'x availability. You agree
that all costs of travel (business class or better), accommodations (business
class or better), meals and an unallocated per diem expense allowance of $250
per day will be paid by AmStar.
3. Fees. The Company agrees to pay for our services a legal and financial
advisory fee as follows:
a. An initial payment of $15,000, payable upon execution of this
agreement, which shall partially defer the initial retainer to the Company's
auditors;
b. Six monthly payments of $5,000 beginning July 1, 2004 and continuing
each month thereafter until fully paid; and
c. An Advisory Fee of 300,000 shares of common stock, based on the
Company's proposed capitalization of 11,000,000 total common shares at the time
of the filing of the registration statement payable upon execution of this
agreement.
These fees will defray the costs of our services and the legal and
accounting fees incurred in connection with the filing of a suitable
registration statement as outlined in your Strategic Alliance Agreement with
Xxxxxxxxxx.xxx, Inc. You may incur other fees which are not included. Examples
of such fees might be filing fees with the SEC or state blue sky authorities;
initial or annual listings in approved manuals such as Standard & Poor's; state
filing fees or taxes for any changes in corporate structure; printing of stock
certificates; fees payable to transfer agents; underwriting discounts,
commissions or selling agent fees or expenses; or other fees to third parties.
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Xx. Xxxxxx Xxxxxxx, Xx.
June 2, 2004
Page Four
3. Expenses. The Company agrees to reimburse us for all of its reasonable,
documented out-of-pocket costs that may be reasonably incurred in the
performance of our duties under this Agreement. Such expenses may include
travel, accommodations, telephone, computer, courier and supplies. Except for
exigent circumstances, we will seek your prior approval for all sums in excess
of $250. All such fees, expenses and costs will be billed as incurred and are
payable by the Company when invoiced. Upon expiration of the Agreement any
unreimbursed fees and expenses will be immediately due and payable.
4. Cooperation and Indemnification. The Company agrees to cooperate fully in
providing required documentation for due diligence, assist in the preparation
and review of required documentation, and response to regulatory comments.
Management must also be reasonably accessible from time to time for personal and
telephone conferences.
The adequacy and accuracy of representations concerning the financial condition
of the Company, its operations, management, properties and structure are the
responsibility and representation of the Company and its management. Any
information furnished to me will be deemed to be full, accurate and fair
disclosure. In the event that any matter becomes untrue or misleading, even if
it was true when the representation was made, you will immediately bring the
change of circumstances to my attention. In addition to the payment of fees and
reimbursement of fees and expenses provided for above, the Company agrees to
indemnify us and our affiliates with regard to the matters contemplated herein.
5. Matters Relating to Engagement. The Company acknowledges that we shall act as
an independent contractor, and any duties arising out of its engagement
hereunder shall be owed solely to the Company. The Company further acknowledges
that we may perform certain of the services described herein through one or more
of its affiliates.
The Company recognizes and confirms that in performing its duties pursuant
to this Agreement, we will be using and relying on information furnished by the
Company (the "Disclosures"), and shall make its officers, directors, employees,
independent accountants and legal counsel reasonably available as needed from
time to time. The Company insures that all Disclosures furnished shall be
accurate and complete in all material respects. If any Disclosure subsequently
becomes materially inaccurate, incomplete or misleading you will notify us
promptly.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina without regard to the
conflict of laws provisions thereof.
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Xxxxxx Xxxxxxx, Xx.
June 2, 2004
Page Five
We must disclose to you that I have consulted with Xxxxxxxxxx.Xxx, Inc. and its
principals ("Peoplesway") in connection with certain legal matters, including
the legal effects and structure of your intended strategic alliance agreement.
In addition, I have known Xxxxxxx X. Xxxxxxx, your auditor, in various
capacities for nearly twenty years. Xx. Xxxxxxx and I are currently officers and
directors in two enterprises and we have had business dealings with one another
from time to time over the years. These associations could be construed as a
conflict of interest with our representation of you.
Your signature below will indicate our disclosure of these potential
conflicts of interest to you and your waiver thereof. Notwithstanding this
waiver, I represent and warrant to you that I have the control and authority
necessary to assure my independence in the rendering of legal services and to
assure compliance with all applicable ethical standards.
If you have any questions or comments regarding the contents of these
disclosures, please feel free to ask us about these matters at your earliest
convenience.
Please confirm that the foregoing correctly sets forth our agreement by
signing below in the space provided and returning this Agreement to us.
We look forward to working with you on this exciting engagement.
Very truly yours,
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
CWB/js
AGREED TO AND ACCEPTED
AMSTAR MORTGAGE CORPORATION
By:______________________________
Name: Xxxxxx Xxxxxxx, Xx.
Title: Chairman
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