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EXHIBIT 10.5
XxxxxxXxxx.xxx International, Inc.
00000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx xxxx Xxxx, Xxxx 00000
(000) 000-0000
Fax: (000) 000-0000
May 31, 2000
Mr. Xxxxxxx Xxxxx
Mr. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx & Co.
00000 Xxxxxxx Xxxxx Xxxxxxx, XXX 792
Xxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
The purpose of this letter is to propose the terms of an agreement
("Agreement") between XxxxxxXxxx.xxx International, Inc., a Delaware
corporation, and its subsidiaries (collectively, "STSN"), and Xxxxx, Xxxxxxx &
Co., a Nevada limited liability company ("MCC"). In this regard, STSN offers the
following:
1. Engagement. STSN hereby engages MCC to serve as STSN's nonexclusive
financial consultant with respect to assisting STSN in structuring, documenting,
and/or arranging public or private equity or debt financing, on balance sheet or
off balance sheet, including the introduction of STSN to potential strategic
partners and providing advisory services with respect to business plans and
forecasts, management, and organizational structure.
2. Compensation for Capital Raising. In connection with any funding,
capital, whether debt or equity, raised for or introduced to STSN as the result
of the direct and substantial efforts of MCC (collectively, a "Financing
Transaction"), STSN agrees to pay MCC, at the closing of any such Financing
Transaction, a "Success Fee" equal to the following:
a. Cash. MCC shall receive a cash payment equal to ten percent
(10%) of the gross amount of any and all monies or other consideration provided
to STSN, including monies received from the conversion of warrants or other
convertible instruments issued in such Financing Transaction.
b. Warrants. MCC shall receive warrants ("Warrants") to purchase
shares of STSN's Common Stock in an amount equal to ten percent (10%) of the
number of securities issued by STSN in a Financing Transaction. The Warrants
shall be exercisable for a period of five (5) years from the closing date of the
Financing Transaction at a price per share equal to the price paid for the
securities issued in the Financing Transaction. All shares underlying such
Warrants shall have piggy-back registration rights should STSN file a
registration statement other than a S-8 or S-4 registration statement.
c. Limitation on Success Fee. Notwithstanding subsections (a)-(b)
in this Section 2, STSN shall be entitled to deduct from the Success Fee and any
and all fees payable to MCC the amount of any finder's fee payable in cash or
securities to any intermediaries in connection with a Financing Transaction.
Payment of the Success Fee shall not apply to consideration provided to or by
STSN to a third party in connection with a Material Transaction or a Qualified
Partnership (as defined below).
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d. Expense Reimbursement for Capital Raising. STSN hereby agrees
to reimburse MCC for any and all expenses incurred in connection with this
Agreement, not to exceed three percent (3%) of the gross amount of any Financing
Transaction. Such reimbursements shall be paid by the end of each month if
submitted by the fifteenth day of such month.
3. Compensation for Mergers & Acquisitions. During the term of this
Agreement or during the twelve-month period following the termination thereof,
with respect to an organization that engages STSN in a merger, acquisition, or a
purchase or sale of all or substantially all of the stock or assets of STSN or
such organization (excluding a Qualified Partnership), and only if such
organization was introduced to STSN by MCC's direct and substantial efforts
(hereafter such transaction is referred to as a "Material Transaction"), MCC
will be entitled to receive the following compensation, subject to any
prohibition or restriction on the payment of commissions as required by law:
a. Cash. MCC shall be entitled to a five percent (5%) cash
commission from any cash consideration paid by STSN in connection with a
Material Transaction.
b. Securities. MCC shall be entitled to five percent (5%) of any
and all securities issued by STSN in connection with a Material Transaction.
c. Limitations. Notwithstanding subsections (a)-(b) in this
Section 3, STSN shall be entitled to deduct, from any amounts payable to MCC
pursuant hereto, the amount of any finder's fee payable in cash or securities to
any intermediaries in connection with a Material Transaction. Payment of the
Success Fee shall not apply to consideration provided to or by STSN to a third
party in connection with a Financing Transaction or a Qualified Partnership (as
defined herein).
4. Compensation for Non-Merger, Non Acquisition Strategic Partnerships.
During the term of this Agreement or during the twelve-month period following
the termination thereof, with respect to an organization that engages STSN in a
joint venture or similar joint enterprise or undertaking (excluding a Material
Transaction), and only if such organization was introduced to STSN by MCC's
direct and substantial efforts (hereafter such engagement is referred to as a
"Qualified Partnership" and such organization is referred to as a "Qualified
Partner"), MCC will be entitled to receive the following compensation, subject
to any prohibition or restriction on the payment of commissions as required by
law:
a. First, Second, and Third Years. Beginning the date hereof and
continuing until three (3) years therefrom, MCC shall be entitled to ten percent
(10%) of Net Revenues received by STSN resulting from such Qualified
Partnership.
b. Fourth and Fifth Year. Beginning three (3) years from the date
hereof and continuing until five (5) years therefrom, MCC shall be entitled to
four percent (4%) of Net Revenues received by STSN resulting from such Qualified
Partnership.
c. Sixth and Seventh Year. Beginning five (5) years from the date
hereof and continuing until seven (7) years therefrom, MCC shall be entitled to
two percent (2%) of Net Revenues received by STSN resulting from such Qualified
Partnership. No compensation shall be payable to MCC pursuant to this Section 4
after seven (7) years from the date hereof.
For purposes of this Section 4, "Net Revenues" shall mean cash consideration
received by STSN that is directly and substantially attributable to STSN's
relationship with a Qualified Partner, less: (i) internet access and computer
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related expenses, (ii) host computer and network equipment costs, (iii)
technology personnel, technical support, billing, and related costs associated
with operating the web site, (iv) costs associated with customer support and
website operations, (v) royalties paid to information and service providers,
(vi) royalties paid for licensed technologies, (vii) costs of merchandise sold,
(viii) sales returns and allowances, (ix) fees paid to content providers, (x)
fees paid to organizations in connection with online registration, and (xi) all
other items normally included in determining cost of goods sold of similar
enterprises under generally accepted accounting principles.
4. Expenses, Generally. Except for reimbursement of expenses provided
in connection with capital raising as provided in Section 2(e) above, MCC will
be responsible for the payment of all expenses that MCC may incur in connection
with the performance of the services under this Agreement.
5. Confidentiality. It is understood that during the course of this
engagement MCC will be furnishing proprietary and confidential advice and
information to STSN relating to strategic relationships, management consulting
and advisory, and capital formation from sources developed by MCC through its
relationships with such sources and that accordingly, any such information or
any other information relating to MCC's efforts on STSN's behalf with third
parties provided to STSN by MCC, is confidential. STSN agrees to treat as
confidential any such information or related or similar information provided by
MCC and STSN will not without MCC's prior written consent, disclose such to any
third party. MCC will treat as confidential and will not, without the prior
written consent of STSN, disclose to any third party any confidential
information provided to MCC by STSN. Notwithstanding the foregoing, the terms of
this Paragraph 6 shall not apply to any information which is or becomes
generally available to the public, is required by law to be disclosed, or is
obtained from any third party which is in possession of such information through
no fault of MCC and is not under any obligation, to MCC's knowledge, to treat
such information as confidential.
6. No Obligation to Consummate Transaction. STSN is not obligated to
accept a Financing Transaction, Material Transaction, or a Qualified Partnership
hereunder. STSN may reject any such Financing Transaction, Material Transaction
or Qualified Partnership for any reason or for no reason. If the Company decides
to engage in a Financing Transaction, Material Transaction, or a Qualified
Partnership, the final terms of any such agreement will be the subject of
negotiation between STSN and such organization with which STSN may engage in its
discretion. Unless otherwise specified in writing and signed by a duly
authorized representative of STSN, MCC has no authority to negotiate such
transaction on behalf of STSN.
7. Conflicting Obligations. MCC represents and warrants to STSN that
MCC does not have any pre-existing obligations that are inconsistent with this
Agreement or that might prevent or impair MCC's ability to perform the services
contemplated hereunder. MCC also agrees not to enter into any such conflicting
obligations during the term of this Agreement.
8. Indemnification. MCC, on behalf of itself and its affiliates, hereby
jointly and severally agrees to indemnify STSN and the STSN, on behalf of itself
and its affiliates, hereby agrees to indemnify MCC and each of them from any and
all liabilities, losses, damages, costs, or expenses (including without
limitation court costs and reasonable fees of attorneys, accountants, and expert
witnesses) relating to any action or other proceeding instituted, maintained,
prosecuted by, or voluntarily aided by any party where such action or proceeding
is contrary to the provisions of this Agreement.
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9. Termination. Either STSN or MCC may terminate this Agreement at
anytime for any reason (or for no reason) by giving written notice to the other
of such termination at least thirty (30) days in advance of the date of such
termination. Upon termination of this Agreement, all obligations of STSN and all
obligations of MCC shall cease, except that the provisions of the Agreement
contained in Sections 7 through 16 below shall continue in effect, as
appropriate. All liability of either party for any breach of this Agreement
shall also survive termination hereof. Upon any such termination, MCC and STSN
shall each promptly return to the other all information considered by the other
party as confidential or proprietary. Except as specifically set forth herein,
upon such termination, MCC shall be entitled to compensation earned prior to the
date of termination computed pro rata up to and including the date of
termination, but shall not be entitled to any further compensation or
reimbursement following such date.
10. Independent Contractor Status. It is understood and agreed that
STSN engages MCC as an independent contractor, solely to provide the services
described herein. Nothing contained in this Agreement nor the performance of
services contemplated hereby, or otherwise, shall create a fiduciary duty on the
part of MCC to STSN, nor shall MCC have any duties, obligations or liability to
the security holders of STSN or any third party in connection with its
engagement hereunder.
11. Licenses. MCC now possesses or shall obtain all required licenses
or permits of any governmental agency as may be necessary for MCC to perform the
services hereunder.
12. Exclusions. This Agreement shall not apply to any financial or
strategic relationship with Promia Incorporated, the National Football League,
or any persons or contacts introduced to STSN by Xxxxxxx Xxxxx, MCC, The Sunvest
Corporation, X.X. Xxxxxx Associates, or Xxxxxx Xxxxxx prior to May 24, 2000.
13. Notices. Any notice required hereunder to be given by either party
shall be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, with written
verification of delivery, or by facsimile transmission to the other party to the
address or telephone number set forth below or to such other address or
telephone number as either party may designate from time to time according to
this provision. A notice delivered personally shall be effective upon receipt. A
notice sent by facsimile transmission shall be effective twenty- four hours
after the dispatch thereof. A notice delivered by mail or by private courier
shall be effective on the third day after the day of mailing.
to STSN at: to MCC at:
XxxxxxXxxx.xxx Xxxxx, Xxxxxxx & Co.
10421 South 400 West, Xxxxx 000 00000 Xxxxxxx Xxxxx Xxxxxxx, XXX 792
Salt Lake City, Utah 84095 Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx Attention: Xxxxxxx X. Xxxxx
Telefax: (000) 000-0000 Telefax: (000) 000-0000
14. Entire Agreement. This Agreement constitutes the entire
understanding between STSN and MCC with reference to the subject matter hereof
and supersedes any prior understandings and agreements related thereto, whether
written or oral. This Agreement may be executed in one or more counterparts,
which together shall constitute a binding agreement. A signed facsimile will
create and constitute an original, legally binding agreement on the party
sending the same.
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15. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Utah, without any references
to conflicts of laws. Each of the parties hereto consents to the exclusive
jurisdiction of the courts of Salt Lake County, State of Utah for resolution of
any disputes arising hereunder.
If the foregoing constitutes the agreement and understanding of STSN,
please confirm by signing and returning one copy of this Agreement to me,
whereupon this Agreement shall become binding between STSN and MCC as of the
date first above written.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Executive Vice
President
XxxxxxXxxx.xxx International, Inc.
Agreed to and accepted this 31st day
of May, 2000
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Managing Director
Xxxxx, Xxxxxxx & Co.
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