EXHIBIT 10.5
IVEST FINANCIAL, LC
August 5, 2000
VIA E-MAIL
Xxxxxxx X. Xxxxxx, CEO
VentureNet, Inc.
Dear Xxxxxxx:
This letter is for the purpose of the engagement of iVest Financial, LC
("iVest") as a financial consultant to VentureNet, Inc. (the "Company")
regarding various matters arising in connection with the Company's business in
order for the Company to meet its goals and objectives of maximizing shareholder
value. This letter is intended to serve as our engagement agreement (the
"Agreement") to provide such services. We will provide strategic consulting,
capital strategy, and merger and acquisition advisory services to the Company on
an "as needed, as available" basis. We will take direction only from the CEO of
the Company or other person approved by us. The term of our engagement will be
for a period of one year from the date of this letter.
1. Consulting Fees. For these services we will receive a warrant to
purchase up to 500,000 shares of common stock of the Company pursuant to the
form of warrant attached hereto as Exhibit "A". This warrant is fully earned and
nonrefundable as of the date of this Agreement, and neither this Agreement nor
the warrant may be terminated or voided without our prior written consent.
2. Transaction Fees. Should iVest introduce the Company to any source
that leads to a contract and closing of any financing, whether debt or equity,
or any merger, acquisition of other similar transaction, in one or more stages,
or a strategic alliance or customer, then the Company agrees to pay iVest, in
cash and/or stock (at iVest's option), on the closing of any such
transaction(s), the following percentages of the Total Consideration (i)
received at settlement and (ii) received subsequent to settlement as stipulated
by any applicable contract:
a. for Equity Financings: seven percent (7%) of the gross cash
proceeds plus a warrant to purchase seven percent (7%) of the
number of shares purchased by investors. Such warrants will
have a maximum term of three (3) years and provide for an
exercise price equal to the 100% of the per share price paid
by investors.
b. for Debt Financings. three and one-half percent (3.5%). If
debt financing is in the form of line of credit, then 1/3 of
the fee will be payable on the closing of the loan, 1/3 within
thirty (30) days after closing, and the final 1/3 within sixty
(60) days after closing, notwithstanding the timing of any
draws on the line of credit. The entire available loan amount
shall be considered the total consideration against which our
fees will be calculated.
c. for any merger or acquisition, an amount equal to 5% of the
total transaction value, payable at the same time and in the
same form as paid or received by the Company or its
stockholders. In the event that the Company is the acquiror in
such a transaction iVest will also be entitled to receive a
warrant to purchase 5% of the number of share issued or
issuable to the stockholders of the Target company. Such
warrants will have a maximum term of three (3) years and
provide for an exercise price equal to the 100% of the per
share value received by the stockholders of the Target
company. For purposes of this subparagraph. "Total Transaction
Value" shall include any form of payment, other than payments
under personal service contracts, made by the acquiring
company to or for the benefit of the stockholders of the
acquired company, including any separate transaction
000 X. Xxxxxxx Xxxx., Xxxxx 000 - Xxxxxxx, Xxxxxxx 000X0
Telephone: (000) 000-0000 - Fax (407) 000- 0000
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Xx. Xxxxxxx X. Xxxxxx
August 10, 2000
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affecting assets owned by the stockholders of the acquired
company and used by the Company or any acquired company (e.g.,
purchase or lease of any real estate, other fixed assets, or
other assets owned by the stockholders of any acquired
company). If any part of the total transaction value shall be
contingent upon future earnings or other contingencies, then
iVest's fees shall be payable as and when such payments are
actually made.
d. for a strategic alliance or customer relationship, an amount
equal to 5% of the net contribution to fixed costs, overhead
and profit derived by the Company during the first three years
of the alliance or customer relationship
All of the fees set forth in this Section 2 shall be independent and
irrespective of any other fees or payments made to finders, intermediaries,
broker/dealers, etc., all of which fees shall be the sole responsibility of the
Company. Notwithstanding the generality of the foregoing, if the Company is
required to retain the services of a finder, intermediary, broker/dealer or
other person in connection with any equity financing, then the aggregate
compensation payable to iVest and such intermediaries shall not, in any event,
exceed fifteen percent (15%) of the gross cash proceeds plus a warrant to
purchase ten percent (10%) of the number of shares purchased by investors.
Similarly, if the Company is required to retain the services of a finder,
intermediary, broker/dealer or other person in connection with any debt
financing, the aggregate compensation payable to iVest and such intermediaries
shall not, in any event, exceed five percent (5%) and if the Company is required
to retain the services of a finder, intermediary, broker/dealer or other person
in connection with any merger, acquisition, strategic alliance or customer
relationship, the aggregate compensation payable to iVest and such
intermediaries shall not, in any event, exceed ten percent (10%)
3. Limitation on Services. As a financial consultant to the Company,
iVest will assist you as described above but will not act as your agent or
broker. Accordingly, while iVest may identify prospective financing sources and
target companies and provide information relating to the transaction to such
persons at your request, iVest will not solicit purchases or sales of
securities. All business decisions relating to acceptance or rejection of
offers, bids or other matters and the negotiation of such terms shall be solely
your responsibility. You are also responsible for taking steps to ensure that
the transaction is conducted in compliance with all applicable federal and state
securities laws (consulting with counsel, if you consider it appropriate)
4. Reimbursement of Expenses. The Company agrees to reimburse iVest all
pre-approved, reasonable out-of-pocket expenses incurred in connection with the
services described herein.
5. Exclusive Sources: Any financing sources, strategic partners,
customers, or intermediaries introduced to the Company directly by iVest are
exclusive to iVest and shall not be directly or indirectly circumvented by the
Company. If the Company closes any financing or other transaction as a result of
or through the efforts or contacts of iVest, then iVest will be entitled to its
full fees. It is agreed that, should the Company receive any funding or enter
into any other transaction resulting from the efforts of iVest, then, for a
period of twenty-four (24) months from the date of such transaction, the Company
shall pay iVest for any subsequent funding obtained and settled from or through
any such source.
6. Miscellaneous:
a. Confidentiality. The parties agree that they will cooperate
with each other and provide full due diligence, and that all
conversations, documentation, or work product will be kept in
the utmost confidence. iVest will not have the permission to
offer, copy, or duplicate any part of the work product of the
Company without express written permission. All matters of the
Company and/or iVest will be kept in the strictest of
confidence. Any misrepresentation by either party shall
constitute a breach of this agreement. Notwithstanding the
generality of the foregoing, the Company reserves the right to
fully
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August 10, 2000
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disclose the terms of compensation and any other financial
intermediary to all parties to a transaction giving rise to
such Compensation
d. Indemnification. It is understood that each party shall be
held harmless from any and all legal action resulting from the
other's misstatements, omissions, or errors, of any kind and
shall be indemnified from any and all direct legal expenses
and any and all direct costs, excluding salary and any loss of
business such party may incur as a result of the other's
actions.
c. Entire Agreement. This Agreement sets forth the entire
understanding of the parties relating to the subject matter
hereof and supersedes any prior communications,
understandings, and agreements between the parties. This
Agreement cannot be modified or changed nor can any of its
provisions be waived, except by a writing signed all parties.
d. Governing Law. This Agreement shall be governed by the laws of
the State of Florida. Any controversy between the parties
shall be resolved by binding arbitration in Orlando, Florida.
e. Attorney's Fees. In the event any controversy arises out of or
in connection with this Agreement, the prevailing party in
such controversy shall be entitled to recover from the other
party all reasonable attorneys' fees, expenses and costs,
including costs associated with any necessary collection
proceedings.
If the foregoing letter is in accordance with our understanding of the
terms of our engagement, please sign, date, and return your signature to us via
facsimile with an original via mail.
Very truly yours
iVest Financial, LC
By: /S/ X. XXXXXXX XXXXXXX
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X. Xxxxxxx Xxxxxxx, Principal
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AGREED AND ACCEPTED:
VentureNet, Inc.
BY: August __, 2000
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Xxxxxxx X. Xxxxxx, CEO
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