Banking Agreement - George Schneider and Make Your Move Inc.
George Schneider
40 WEST ELM STREET " GREENWICH, CONNECTICUT 06830
TEL: 914-654-8303 E-MAIL: idealmgmt@aol.com
June 19, 2001
PRIVATE AND CONFIDENTIAL
Mr. Henry Rolling By Overnight Delivery and
President E-Mail
Make Your Move, Inc.
321 Broadway Boulevard
Reno, NV 89502
Dear Henry:
This letter agreement (this "Agreement") confirms our understanding that
Make Your Move, Inc. and its subsidiaries and affiliates, as appropriate, ("MYM"
or the "Company") has engaged George Schneider and his successors and assigns,
as appropriate, (the "Advisor") to act as its financial advisor, investment
banker and placement agent, where appropriate, in connection with: 1) the
placement by the Company of securities associated with an equity financing in
the amount of up to approximately $15,000,000 of convertible preferred stock
(the "Equity Securities") and 2) the execution by the Company of any transaction
pursuant to which the business of the Company is combined through a merger,
joint venture, consolidation, reorganization or other business combination
and/or the acquisition of an interest in the Company by way of an exchange
offer, tender offer, negotiated purchase or any other means (individually and
collectively, a "Business Combination").
Retention
For the term hereof, MYM hereby appoints the Advisor as the Company's
financial advisor, investment banker and placement agent in connection with the
placement of the Equity Securities and the execution of a Business Combination.
Subject to the terms and conditions of this Agreement, the Advisor accepts
this appointment. The Advisor agrees that in his capacity hereunder, he will use
his commercially reasonable efforts, consistent with his business judgement, to
advise the Company and arrange a placement of the Equity Securities and/or the
execution of a Business Combination. In no event shall the Advisor be obligated
to purchase the Equity Securities for his own account or for the accounts of the
Investors, as defined herein.
Services
The services to be performed by the Advisor shall include, but not be
limited to:
(a) Meeting with the management of MYM to review the Company's historic,
current and prospective operations, business and financial condition;
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(b) Completing a due diligence review of MYM to determine the Advisor's
view of the Company's expected cash flow, borrowing capacity, current
and potential enterprise value;
(c) Advising MYM as to appropriate structure, terms and conditions to be
included in the Equity Securities and/or a Business Combination;
(d) Preparing the appropriate Offering Material, as herein defined, to be
used to solicit prospective investors for the Equity Securities (the
"Investors") and/or interest in a Business Combination;
(e) Identifying and contacting the Investors and/or parties interested in
a Business Combination;
(f) Recommending a negotiating strategy and assisting in negotiating the
terms and conditions of the Equity Securities and/or a Business
Combination; and
(g) Assisting in closing the Equity Securities and/or a Business
Combination.
Fee Structure
As compensation to the Advisor for his services hereunder, MYM agrees to
pay the Advisor the following fees (collectively, the "Fees"):
(a) A retainer fee, payable in cash, of $5,000 per month for the Initial
Term, as defined herein (the "Retainer Fee"): 1) a first payment of $2,500,
representing the pro-rata payment for the partial month June 2001, to be paid
upon execution of this Agreement, 2) the second through fifth payments of $5,000
per month, representing payments for the full months July 2001 through and
including November 2001 and 3) a last payment of $2,500, representing the
pro-rata payment for the partial month December 2001, to be paid on the first
business day of each subsequent month, beginning July 2001 and ending December
2001. The Retainer Fee shall serve as a credit toward the Equity Financing Fee
and/or the Business Combination Fee, as defined herein;
(b) An equity financing fee, payable in cash upon the closing of the
placement of the Equity Securities (the "Equity Closing"), equal to six percent
(6.0%) of the total proceeds raised by the Company in the placement of such
Equity Securities (the "Equity Financing Fee");
(c) An equity financial advisory fee, payable in warrants upon the Equity
Closing, consisting of warrants to acquire shares of the common stock of the
Company equal to one percent (1.0%) of the fully diluted shareholder interest of
the Company after the effect of the issuance of the Equity Securities, with a
strike price equal to the implied sale price per share in the placement of the
Equity Securities (the "Equity Advisory Fee"), with a term of five (5) years and
with customary and ordinary demand and piggy-back registration rights after the
Company completes an initial public offering; and
(d) A business combination fee, payable in cash upon the closing of a
Business Combination (the "Business Combination Closing", and collectively with
the Equity Closing, the "Closings"), equal to three percent (3.0%) of the
Company's Total Enterprise Value, as defined herein, calculated at the date of
such Business Combination (the "Business Combination Fee").
For the purpose of this Agreement, the term "Total Enterprise Value" means
an amount equal to the sum of the aggregate fair market value of any securities
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issued and any other non-cash consideration received (including, without
limitation, any joint venture interest delivered to, or retained by the
Company), and any cash consideration paid, to the Company or its security
holders in connection with a Business Combination, and the amount of all
indebtedness of the Company, which is assumed to be forgiven or retired in
connections with such a Business Combination. The fair market value of any
securities issued and any other non-cash consideration delivered or retained in
connection with such Business Combination will be the value determined by the
Company and the Advisor upon such Business Combination Closing.
With the exception of the Retainer Fee, the above specified Fees will be
payable in respect of the services rendered in connection with each separate
placement of the Equity Securities (or securities of the same or similar class
as the Equity Securities) and/or execution of a Business Combination, whether
such placement and/or business combination has been arranged by the Advisor, by
another agent of the Company or directly by the Company and whether such
placement and/or business combination is conducted in one transaction or a
series of transactions.
Expense Reimbursement
In addition to any Fees that may be payable to the Advisor under this
Agreement, MYM agrees to reimburse the Advisor, on a monthly basis or at such
other times as the Advisor may request, for all of the Advisor's reasonable
out-of-pocket expenses and travel expenses incurred in connection with his
activities hereunder, without regard to whether or not any of the Closings
occur, including the fees and disbursements of his legal counsel, if any,
resulting from or arising out of this engagement. The Advisor's expenses, except
the fees and disbursements of his legal counsel, shall not cumulatively exceed
$3,500 per month without the prior written approval of the Company.
Term
The initial term of this Agreement shall, except as otherwise mutually
agreed, run for a period of one hundred eighty (180) days from the date this
Agreement is executed (the "Initial Term"). In addition, if substantial and
material progress has been made during the Initial Term to facilitate any of the
Closings, the parties hereto agree to extend the term of this Agreement for an
additional sixty (60) days as may be reasonable and necessary to complete any of
the Closings. The foregoing notwithstanding, the Advisor shall be entitled to
the Fees as provided herein with respect to any placement of the Equity
Securities (or securities of the same or similar class as the Equity Securities)
and/or execution of a Business Combination that 1) utilizes, various of its form
or methodology, any information or data which the Advisor has provided, and may
continue to provide during the term hereof, regarding any Investors and/or
parties interested in participating in a Business Combination to be included in
the Equity Securities and/or a Business Combination and 2) is consummated within
one (1) year from the expiration or termination of this Agreement.
Termination
The engagement hereunder may be terminated by the Company or the Advisor at
any time upon thirty (30) days prior written notice to the other, provided that
the Advisor shall be entitled to the Fees and reimbursement of expenses in
accordance with this Agreement through the date of termination; and provided,
further, that if this Agreement is terminated by the Advisor because of a
material breach by the Company or if the Company shall terminate this Agreement
for any reason other than a material breach by the Advisor of his obligations,
and a placement of the Equity Securities (or securities of the same or similar
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class as the Equity Securities) and/or execution of a Business Combination that
1) utilizes, various of its form or methodology any information or data which
the Advisor has provided, any may continue to provide during the term hereof,
regarding any Investors and/or parties interested in a Business Combination to
be included in the Equity Securities and/or a Business Combination and 2) is
consummated within one (1) year after such termination, the Advisor shall
thereupon be paid the Fees as provided herein.
Information
MYM will furnish to the Advisor on a timely basis, and in a satisfactory
format and detail to the Advisor, such data and information as the Advisor may
reasonably request. MYM represents and warrants that such data and information
is or will be accurate and complete in all material respects. MYM acknowledges
that the Advisor is relying, without independent verification, on the accuracy
and completeness of all information furnished. MYM further agrees that its
failure or inability to expeditiously provide such data or information, or to
secure timely access to key personnel and facilities, may have a material
adverse affect on the scope, timing and success of this engagement.
Offering Material
The Advisor may, upon review and approval of MYM, prepare a term sheet,
research report, private placement memorandum, official statement and/or
remarketing memorandum, with respect to the Company and the placement of the
Equity Securities and/or execution of a Business Combination (all such
documents, in the form finally approved by the Company, taken individually and
collectively shall be hereafter referred to as the "Offering Material"). MYM
represents and warrants that the information contained in its Offering Material
will not include any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make statements
contained therein, in light of the circumstances under which they are being
made, not misleading. MYM agrees to advise the Advisor immediately in writing of
the occurrence of any event or any other change known to the Company which
results in the Offering Material containing an untrue statement of a material
fact or omitting to state any material fact required to be stated therein or
necessary to make statements therein, in light of the circumstances under which
they were made, not misleading. MYM agrees to execute certificates evidencing
representations and warranties of the Company respecting material provisions of
the Offering Material.
MYM authorizes the Advisor, as its agent; to furnish any Investors and
parties of interest in a Business Combination copies of the Offering Material
and, with the written approval of the Company, any other document or relevant
information supplied to the Advisor.
Conditions of Placement
The Advisor agrees to use his best efforts, consistent with his business
judgment, to affect the Closings as soon as practicable. The Closings are
conditioned upon and subject to, among other things, documentation reasonably
acceptable to MYM and the Advisor, market conditions applicable to the private
equity markets and satisfaction of the conditions set forth in each equity
purchase agreement and/or business combination agreement (individually and
collectively, the "Financing Agreements") to be entered into by and between the
Company and the respective Investors and/or business combination parties named
therein, and in the Offering Material, including any supplements and amendments
thereto.
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No Unauthorized Use of Advice
Any summary of, or reference to, any communication, whether written or oral
with respect thereto, in whole or in part, to third party advisors will be
subject, in each instance to said party's written agreement to confidentiality,
nondisclosure and indemnification of the Advisor. Notwithstanding the preceding
sentence, nothing in this Agreement shall be construed as a prohibition on the
distribution of any communication as required by implementation of the placement
of the Equity Securities and/or execution of a Business Combination, to officers
of the Company, their legal counsel, accountants or financial consultants or to
regulatory agencies. If the Advisor resigns prior to the dissemination of any
Offering Material, or prior to the finalization of the forms of the Financing
Agreements or any other documents or information prepared in connection with the
placement of the Equity Securities and/or execution of a Business Combination,
the term hereof shall be deemed ended and no reference to the Advisor whatsoever
shall be made in materials disseminated after said resignation.
Confidentiality
The Advisor agrees to keep non-public information confidential so long as
it remains non-public, unless disclosure is required by law or requested by any
governmental or regulatory agency or body, and will not make any use thereof,
except in connection with their services hereunder.
Other than as agreed or as required by implementation of the placement of
the Equity Securities and/or execution of a Business Combination, the Company
shall not convey to the public through advertising, public relations, news,
sales, mail, direct transmittal, or other media, nor through any offering
circular or registration statement, prospectus, appraisal, loan or other
agreements or documents all or any part of written or oral presentation with
respect to the placement of the Equity Securities and/or execution of a Business
Combination, nor other communication or documentation delivered, nor any
reference to the Advisor or to any individuals assigned by the Advisor to this
engagement, without the prior written consent of the Advisor.
Indemnification
If either party to this Agreement brings an action based on this Agreement,
the prevailing party shall be entitled to recover reasonable expenses therefor,
including, but not limited to, attorneys' fees, expenses and court costs.
In addition, MYM agrees to indemnify and hold harmless the Advisor and his
affiliates, counsel and other professional advisors, the respective directors,
officers, agents and employees of each of the foregoing or any of their
affiliates within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities and Exchange Act of 1934, as
amended, (individually, an "Indemnified Party" and collectively, the
"Indemnified Parties"), from and against all losses, claims, damages, expenses
or liabilities resulting from, relating to, or arising out of action taken or
omitted to be taken (i) by the Company or (ii) by an Indemnified Party in good
faith pursuant to the terms of, or in connection with, services rendered
pursuant to this Agreement or any of the transactions covered thereby. In
addition, the Company agrees to reimburse each Indemnified Party for all
reasonable out-of-pocket and direct expenses (including reasonable fees and
expenses of counsel) as they are incurred by such Indemnified Party in
connection with investigating, preparing or defending any such action or claim,
whether or not in connection with litigation in which any Indemnified Party is
named party.
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Notwithstanding the foregoing, MYM shall not be liable to an Indemnified
Party in respect to any loss, claim, damage, liability or expense to the extent
the same is determined, in a final judgment by a court of competent
jurisdiction, to have resulted primarily and directly from the gross negligence
or willful misconduct of that Indemnified Party.
In the event of the assertion against any Indemnified Party of any claim or
the commencement of any action or proceeding, MYM shall be entitled to
participate in such action or proceeding, and in the investigation of such
claim, and after written notice from the Company, to assume the investigation or
defense of such claim, action or proceeding with counsel of its choice at its
expense; provided however, that such counsel shall be reasonably satisfactory to
that Indemnified Party. Notwithstanding MYM's election to assume the defense or
investigation of such claim, action or proceeding, any Indemnified Party shall
have the right to employ separate counsel (and local counsel, if necessary) and
to participate in the defense or investigation of such claim, action or
proceeding, and the Company shall advance and bear the expense (including
reasonable fees and disbursements) of such separate counsel. In the event that
MYM shall have assumed the defense or investigation of any claim, action or
proceeding, the Company may not settle any such claim, action or proceeding
without the written consent of any Indemnified Party named as defendant therein.
If for any reason the foregoing indemnification is unavailable to an
Indemnified Party or is insufficient to hold it harmless as contemplated herein
then the indemnifying party shall contribute to the amount paid or payable by
the Indemnified Party as result of such loss, claim, liability or expense in
such proportion as it appropriate to reflect not only the relative benefits
received by the Company and their affiliates, on the one hand, and the Advisor,
or the other applicable Indemnified Party, as the case may be, on the other
hand, but also the relative fault of the Company and their affiliates and any
Indemnified Party, as the case may be, as well as any other relevant equitable
considerations, subject to the limitation that in any event the aggregate
contribution of all Indemnified Parties to all losses, claims, liabilities,
damages and expenses shall not exceed the amount of fees actually received by
the Advisor pursuant to this Agreement. It is hereby further agreed that the
relative benefits to MYM on the one hand and the Advisor on the other hand with
respect to any transaction or proposed transaction contemplated by this
Agreement shall be deemed to be in the same proportion as (i) the total value of
the transaction to (ii) the fee paid to the Advisor with respect to such
transaction.
No Indemnified party shall have any liability to MYM or any other person in
connection with the services rendered pursuant to this Agreement, except for the
liability for losses, claims, damages or liabilities finally judicially
determined to have resulted from such Indemnified Party's gross negligence or
willful misconduct. The indemnity, contribution and expense reimbursement
obligations set forth herein shall be in addition to any liability the Company
may have to an Indemnified Party at common law or otherwise, and shall survive
the expiration of the term of this Agreement.
If any personnel of an Indemnified Party appears as a witness, are deposed
or are otherwise involved in the defense of any action against any Indemnified
Party, MYM or any officer or director of the Company, MYM will reimburse such
Indemnified Party for all reasonable out-of-pocket and direct expenses
(including the reasonable fees and expenses of counsel for such Indemnified
Party) incurred by it by reason of any of its personnel being involved in any
such action and will compensate the Advisor for time spent, by his employees
preparing for and testifying as witnesses in any deposition or proceeding at the
Advisor's customary daily rates.
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Governing Law
This Agreement shall be governed by and construed in accordance with the
internal substantive laws, and not the choice of law rules, of the State of New
York. Any suits, claims, causes of action, or disputes arising under this
Agreement shall be brought in the courts of the State of New York or in the
United States District Court of the Southern District of New York.
Survival
The fee, expense reimbursement and indemnification obligations of MYM
contained herein shall be in addition to any liability the Company may otherwise
have to the Advisor, or any Indemnified Parties, and shall survive the
termination hereof.
Company or Corporate Obligation
The obligations of MYM hereto are solely company or corporate obligations,
and no officer, director, employee, agent, member or controlling person shall be
subject to any personal liability whatsoever, nor will any such claim be
asserted by or on behalf of the Company or any person relying on the written or
verbal conclusions of the Company.
Subsequent Transactions
If at any time within one (1) year from any of the Closings, MYM considers
retaining an investment banker, placement agent or other similar agent in
connection with any related or unrelated investment banking or financing
services for the Company, the Company will use its commercially reasonable
efforts, considering its other relationships, to accord the Advisor an
investment banking, placement and/or other similar agent role for such services.
Notice
Notice given pursuant to any of the provisions of this Agreement shall be
in writing and shall be mailed or delivered to (a) Make Your Move, Inc. at 321
Broadway Boulevard, Reno, NV 89502, Attention: Henry Rolling, President; and (b)
George Schneider, at his offices at 40 West Elm Street, Greenwich, CT 06830.
Sole and Entire Agreement; Binding Effect
This Agreement is the sole and entire Agreement between the parties
pertaining to its subject matter and supersedes all prior agreements,
representations and understandings of the parties. No modification of this
Agreement shall be binding unless agreed to in writing by the Advisor and MYM.
This Agreement shall be binding on and shall inure to the benefit of the
successors and assigns of the parties hereto provided that neither this
Agreement nor any of the Advisors' rights, undertakings or obligations hereunder
may be assigned by the Advisor without the prior written consent of the Company.
Kindly indicate your assent to the terms and conditions of our
understanding by signing this Agreement, whereupon this Agreement shall
constitute a binding contract between MYM and the Advisor. Please return one
copy of this Agreement (the other copy of which is for your files) and your
payment of $2,500, representing the pro rata June 2001 payment of the Retainer
Fee, to the Advisor.
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Very truly yours,
By:/s/George Schneider
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George Schneider
The foregoing has been read, understood and approved, and the undersigned does
hereby agree to retain George Schneider upon the terms and conditions contained
herein. By execution hereof, the undersigned represents full power and authority
to bind Make Your Move, Inc. to the terms and conditions hereof.
Agreed and accepted this 19 day of June 2001:
Make Your Move, Inc.
By /s/Henry L. Rolling
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Henry L. Rolling
President
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