Typhoon Capital Consultants, LLC
0000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
March 15, 2001
Xx. Xxxxxx Xxxx, President and CEO, and
Xx. Xxxx Xxxx, Secretary and Treasurer
Pre-Settlement Funding Corp.
000 X. Xxxxxx Xxxx Xx., Xxxxx 0
Xxxxxxxxx, XX 00000
Dear Messrs. Sens and Xxxx:
This letter agreement (the "Agreement") amends the previous letter
agreement dated January 19, 2001 between Typhoon Capital Consultants, LLC
("Typhoon") and Pre-Settlement Funding Corp. (the "Company") and confirms the
terms and conditions of the engagement of Typhoon, by the Company to render
consulting services to the Company which are referred to herein.
1. Services. Typhoon agrees to perform consulting services for the Company.
The services Typhoon will perform on behalf of Pre-Settlement Funding Corp.
include, but are not limited to, the following:
(i) Strategic Positioning and Capitalization Strategy for Pre-Settlement
Funding Corp.
(ii) Introductions to Venture Capital, Investment Banking, and other Investment
Sources
(iii)Corporate Development and Joint Venture Counsel
(iv) Assist in constructing and/or maintaining an outsourced, cost effective
investor communications infrastructure to manage investor inquiries,
mailing list management, press releases, conference calls and investment
community meetings
(v) Assist in the development of shareholder materials, including quarterly
and annual reports, press releases, road-show presentations, and investor
conference call presentations that communicate Pre-Settlement Funding Corp.
fundamental attributes
(vi) Recruitment of Advisory Board Members
2. Non-exclusive Relationship; No Guarantee. Typhoon will act as a
non-exclusive agent of the Company and shall use its best efforts in the
performance of its services described above. Nothing in this Agreement
shall be construed as limiting Typhoon's right to represent other clients,
except that Typhoon agrees not to represent any other person or entity
which is in direct competition with the Company unless Typhoon first
obtains the Company's written consent, which shall not be unreasonably
withheld.
3. Fees. The Company shall pay to Typhoon for its services a fee of
$4,000 per month. The initial monthly payment shall be due on the first day
of the month after the month in which the Company has a registration
statement on Form SB-2 declared effective by the U.S. Securities and
Exchange Commission (the "SEC"); thereafter, the monthly fee shall be due
and payable on or before the first day of each month. The Company will also
pay Typhoon in shares of the Company's restricted common stock, as detailed
in Section 6 of this Agreement. Additional success fees will be described
later in this Agreement.
4. Expenses. In addition to any fees that may be payable hereunder, the
Company agrees, from time to time upon request, to reimburse Typhoon for
all reasonable and documented out of pocket expenses incurred by it in the
performance of services on behalf of the Company. Such out of pocket
expenses shall include, but are not limited to, costs of long-distance
telephone charges, facsimile services, mileage/travel, messenger services,
printing, copying, postage, and other such ancillary services. It is
understood by Typhoon, however, that any single expense in excess of
$200.00 will be approved, in advance by the Company in writing. Any
disputed expense must be made known to Typhoon in writing within 5 days of
receipt. Out of pocket expenses will be billed on or about the fifteenth of
each month and will be due and payable with 10 days of receipt.
5. Equity Option Participation. As an inducement for Typhoon to enter into
this Agreement, the Company agrees to grant to Typhoon or its successor or
designee an option (the "Option") to purchase 1,500,000 shares of
Pre-Settlement Funding Corp. stock at $1.00 per share (the "Shares").
The granted options will vest immediately upon signing of this Agreement between
the Company and Typhoon. The options shall be freely assignable and transferable
to persons or entities designated by Typhoon. Once vested, the options shall be
immediately exercisable in whole or in part. The Option shall expire on the
earlier of five (5) years from the date of grant and twelve (12) months from the
termination date of this contract. The Shares underlying the options will be
registered in the Company's initial SB-2 filing with the SEC.
The exercise price for the options shall be payable (i) in cash or by check
acceptable to the Company, (ii) by transfer to the Company of non-forfeitable,
unrestricted shares of common stock (other than Common Stock) which (A) have
been owned by Typhoon for more than six months prior to the date of exercise,
(B) have a fair market value on the date of exercise equal to the option price
and (C) are acceptable to the Company, (iii) by the issuance of a recourse
promissory note in form and substance acceptable to the Company, or (iv) by a
combination of such methods of payment. The requirement of payment in cash shall
be deemed satisfied if Typhoon shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell on the exercise date a sufficient number of the shares
being purchased so that the net proceeds of the sale transaction will at least
equal the option exercise price plus payment of any applicable withholding taxes
and pursuant to which the broker undertakes to promptly deliver the full option
exercise price plus payment of any applicable withholding taxes to the Company
on a date satisfactory to the Company.
6. Additional Equity Compensation. Typhoon will receive 50,000 shares of 144
restricted common stock to be issued upon signing. The Company also
represents and warrants to Typhoon that it will comply with all applicable
requirements necessary to allow Typhoon to utilize Rule 144 under the
Securities Act of 1933, as amended (or any successor or similar rule, the
"Securities Act"). Typhoon acknowledges that the certificate representing
the 50,000 shares of common stock will bear substantially the following
restrictive legend:
THE SHARES OF STOCK EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") NOR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATES, AND HAVE BEEN ISSUED IN RELIANCE UPON
EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION, OR
OTHER DISPOSITION OF ANY SUCH SECURITIES OR ANY INTEREST THEREIN MAY
NOT BE ACCOMPLISHED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS, OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY IN
FORM AND SUBSTANCE TO THE CORPORATION TO THE EFFECT THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
7. Transaction Success Fees In the event that the Company has successfully
raised a total of over $1.25 million in cash (through any means including
receipt from Typhoon of payment of the exercise price for Shares pursuant
to the Option) while Typhoon is engaged, or within 60 days of the
termination of this Agreement, and Typhoon has not earned at least $150,000
through a combination of monthly cash retainer and profits from exercising
the Option, then the Company shall pay a $150,000 cash success fee to
Typhoon for its efforts.
8. Termination of the Engagement. Typhoon's engagement hereunder may be
terminated by either the Company or Typhoon at any time, with or without
cause, upon 60 days advance written advice to that effect to the other
party; provided, however, that Typhoon will be entitled to pro-rated fees
and all equity compensation owed if terminated by either party; and
provided further, that the provisions of this Section 8 and Sections 4, 5,
6, 7, and 9 hereof shall survive such termination.
9. Indemnity.
(a) Indemnification by the Company. In connection with Typhoon's
engagement hereunder, including modifications or future additions to
this engagement and the related activities prior to this date, the
Company agrees that it will indemnify, hold harmless and defend
Typhoon and its affiliates, any director, officer, agent or employee
of Typhoon or any of its affiliates and each other person, if any,
controlling Typhoon or any of its affiliates and each of their
successors and assigns against and in respect of any and all losses,
damages, claims, obligations, demands, actions, suits, proceedings,
assessments, liabilities, judgments, recoveries and deficiencies,
costs and expenses (including, without limitation, reasonable
attorneys' fees and costs and expenses incurred in investigating,
preparing, defending against or prosecuting any litigation, claim,
proceeding or demand), all on an after-tax basis, less any amounts
actually paid as insurance reimbursement, of any kind or character
(collectively, a "Loss") related to, arising out of or result from (i)
written information provided by the Company, the Company's employees
or the Company's other agents, for use by Typhoon in connection with
Typhoon's performance of services under this Agreement; (ii) other
action or failure to act by the Company, the Company's employees or
the Company's other agents or by Typhoon at the Company's request or
with the Company's consent or (iii) any breach of, or failure by the
Company to fully perform, or any inaccuracy in, any of the
representations, warranties, covenants or agreements of the Company in
this Agreement, except that clause (ii) relating to actions by
Typhoon, shall not apply with respect to any Losses that are finally
judicially determined to have resulted primarily from Typhoon's bad
faith or gross negligence.
(b) Indemnification by Typhoon. In connection with Typhoon's engagement
hereunder, including modifications or future additions to this
engagement and the related activities prior to this date, Typhoon
agrees that it will indemnify, hold harmless and defend the Company
and its affiliates, any director, officer, agent or employee of the
Company or any of its affiliates and each other person, if any,
controlling the Company or any of its affiliates and each of their
successors and assigns against and in respect of any and all Losses
related to, arising out of or resulting from any act or omission on
the part of Typhoon constituting bad faith or gross negligence.
(c) Notice of Claim. Whenever Typhoon or the Company, as the case may be,
learns of or discovers any matter which may give rise to a claim for
indemnification (the "Claim") against the Company under Section 7(a)
or against Typhoon under Section 7(b) (in either such case, such party
being the "Indemnity Obligor"), as the indemnified party (in either
such case, such party being the "Indemnified Party"), shall give
notice to the Indemnity Obligor of the Claim. With respect to Claims
which are the subject of actions, suits, or proceedings threatened or
asserted in writing by any third party (a "Third Party Claim"), the
Indemnified Party shall, within 15 days following receipt of such
Third Party Claim, promptly notify the Indemnity Obligor in writing of
any Claim for recovery, specifying in reasonable detail the nature of
the Loss and the amount of the liability estimated to arise therefrom.
If the Indemnified Party does not so notify the Indemnity Obligor
within 15 days of its discovery of a Third Party Claim, such Claim
shall be barred only to the extent that the Indemnity Obligor is
prejudiced by such failure to notify. The Indemnified Party shall
provide to the Indemnity Obligor as promptly as practicable thereafter
all information and documentation reasonably requested by the
Indemnity Obligor to verify the Claim asserted.
(d) Defense. If the facts relating to a Loss arise out a Third Party
Claim, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnity Obligor shall,
by giving written notice to the Indemnified Party within 15 days
following its receipt of the notice of such claim, assume the defense
or the prosecution thereof, including the employment of counsel or
accountants, reasonably satisfactory to the Indemnified Party, at its
cost and expense; provided, however, that during the interim the
Indemnified Party shall use its best efforts to take all action (not
including settlement) reasonably necessary to protect against further
damage or loss with respect to the Loss. The Indemnified Party shall
have the right to employ counsel separate from counsel employed by the
Indemnity Obligor in any such action and to participate therein, but
the fees and expenses of such counsel shall be at the Indemnified
Party's own expense, unless (a) the employment thereof has been
specifically authorized by the Indemnity Obligor, (b) such Indemnified
Party has been advised by counsel reasonably satisfactory to the
Indemnity Obligor that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Indemnity Obligor and in the reasonable judgment of
such counsel it is advisable for such Indemnified Party to employ
separate counsel, or (c) the Indemnity Obligor has failed to assume
the defense of such action and employ counsel reasonably satisfactory
to the Indemnified Party. Whether or not the Indemnity Obligor defends
or prosecutes such claim, all the parties hereto shall cooperate in
the defense or prosecution thereof and shall furnish such records,
information and testimony and shall attend such conferences, discovery
proceedings and trial as may be reasonably requested in connection
therewith. The Indemnity Obligor shall not be liable for any
settlement of any such claim effected without its prior written
consent. In the event of payment by the Indemnity Obligor to the
Indemnified Party in connection with any Loss arising out of a Third
Party Claim, the Indemnity Obligor shall be subrogated to and shall
stand in the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may have any
right or claim against such third party relating to such indemnified
matter. The Indemnified Party shall cooperate with the Indemnity
Obligor in prosecuting any subrogated claim. The Indemnity Obligor
will take no action in connection with any claim that would adversely
affect the Indemnified Party without the consent of the Indemnified
Party.
(e) Duration of the Indemnity Obligor's Obligations. The Indemnity
Obligor's indemnification obligations under this Agreement shall
survive the termination of this Agreement.
10. Acknowledgments and Representations.
(a) The Company recognizes and confirms that in performing its duties
pursuant to this Agreement, Typhoon will be using and relying upon
data, material and other information furnished by the Company, its
employees and representatives (the "Information"). The Company hereby
agrees and represents that all Information furnished to Typhoon in
connection with this Agreement shall be accurate and complete in all
material respects at the time furnished, and that if such Information,
in whole or part, becomes materially inaccurate, misleading or
incomplete during the term of Typhoon's engagement hereunder, the
Company shall so advise Typhoon in writing and correct any such
inaccuracy or omission. Typhoon assumes no responsibility for the
accuracy and completeness of such Information. In rendering its
services hereunder, Typhoon shall be entitled to use and rely upon the
Information without independent verification thereof. To the extent
consistent with legal requirements, all Information, unless publicly
available or otherwise available to Typhoon without restriction or
breach of any confidentiality agreement, will be held by Typhoon in
confidence and will not be disclosed to anyone other than Typhoon's
agents and advisors without the Company's prior written approval or
used for any purpose other than those referred to in this Agreement.
(b) The Company understands and agrees that in furnishing the Company with
advice and other services as provided in this Agreement, neither
Typhoon nor any officer, director or agent thereof shall be liable to
the Company, its affiliates or its creditors for errors of judgment or
anything except bad faith or gross negligence in the performance of
its duties under the terms of this Agreement.
(c) The Company acknowledges that Typhoon has been retained solely as an
advisor to the Company, and not as an advisor to or agent of any other
person, and that the Company's engagement of Typhoon is not intended
to confer rights upon any persons not a party hereto (including
shareholders, employees or creditors of the Company) as against
Typhoon, Typhoon's affiliates or their respective directors, officers,
agents and employees.
(d) The Company represents and warrants to Typhoon that it will not cause,
or knowingly permit (a) any action to be taken which violates or (b) a
failure to act, the effect of which violates, any federal or state
securities law.
(e) Typhoon acknowledges that it has been retained solely as an advisor to
the Company and that the Company's engagement of Typhoon is not
intended to confer upon Typhoon the right or authority to make
representations on behalf of or to bind the Company with respect to
any other person.
(f) Typhoon acknowledges that is has received such written information as
Typhoon deems appropriate to evaluate its investment in the Option,
the related Shares and the shares granted pursuant to Section 6 hereof
(the "Section 6 Shares"). Typhoon has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting
on behalf of the Company concerning the offering of the Option, the
Shares and the Section 6 Shares.
(g) Typhoon acknowledges that it is not investing in the Option, the
Shares or the Section 6 Shares as a result of or pursuant to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or
radio.
(h) Typhoon acknowledges that it has such knowledge and experience in
financial, tax and business matters so as to enable it to utilize the
information made available to it in connection with the offering of
the Option, the Shares and the Section 6 Shares to evaluate the merits
and risks of an investment in the Option, the Shares and the Section 6
Shares and to make an informed investment decision with respect
thereto.
(i) Typhoon acknowledges that it will not sell or otherwise transfer the
Option, the Shares or the Section 6 Shares without registration under
the Securities Act or an exemption therefrom and otherwise in
accordance with all applicable securities laws including, without
limitation, all applicable California "blue sky" laws. Typhoon
represents that it has obtained the Option, the Shares and the Section
6 Shares for its own account, for investment and not with a view to
resale or distribution except in compliance with the Securities Act
and all other applicable securities laws, including, without
limitation, all applicable California "blue sky" laws.
(j) Typhoon is an accredited investor by virtue of being an entity in
which all of the equity owners are accredited investors.
(k) Typhoon represents and warrants to the Company that it will not cause,
or knowingly permit (a) any action to be taken which violates or (b) a
failure to act, the effect of which violates, any federal or state
securities law.
11. Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by
hand or fax or mailed by overnight courier or first class certified or
registered mail, return receipt requested, postage prepaid and
properly addressed as follows:
If to Typhoon, at Typhoon Capital Consultants, LLC, 0000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: President. If
to the Company, at Pre-Settlement Funding Corp., 000 X. Xxxxxx Xxxx Xxxxx, xxxxx
0, Xxxxxxxxx, XX 00000, Attention: President.
Any party may change its address for purposes of this provision by giving
the other party written notice of the new address in the manner set forth above.
Notice will be conclusively deemed to have been given when personally delivered,
or if given by mail, on the second day after being sent by overnight courier or
on the third day after being sent by first class, registered or certified mail,
or if given by fax, when confirmation of transmission is indicated by the
sender's fax machine.
12. Arbitration. All controversies, disputes or claims arising out of or
relating to this Agreement shall be resolved by binding arbitration in
the city of Washington, D.C. The arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. All arbitrators shall possess such experience
in, and knowledge of, the subject area of the controversy or claim so
as to qualify as an "expert" with respect to such subject matter. The
governing law for the purposes of any arbitration arising hereunder
shall be as set forth in Section 13 hereof. The prevailing party shall
be entitled to receive its reasonable attorney's fees and all costs
relating to the arbitration. Any award rendered by arbitration shall
be final and binding on the parties, and judgment thereon may be
entered in any court of competent jurisdiction.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California, without regard to the
conflicts of laws provisions thereof, and may not be amended or modified
except in writing signed by both parties.
14. Successors. This Agreement and all rights and obligations thereunder shall
be binding upon and inure to the benefit of each party's successors, but
may not be assigned without the prior written consent of the other party.
15. Severability. If any provision of this Agreement shall be held or made
invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby
and, to this extent, the provisions of this Agreement shall be deemed
severable.
16. Authorization. The Company and Typhoon each represents and warrants that it
has all requisite power and authority, and has received all necessary
authorizations, to enter into and carry out the terms and provisions of
this Agreement.
Please confirm that the foregoing correctly sets forth our Agreement by
signing the enclosed letter in the space provided and returning them to us for
execution, whereupon we will send you a fully executed original letter which
shall constitute a binding Agreement as of the date first above written. We look
forward to working with you on this assignment.
Very truly yours,
TYPHOON CAPITAL CONSULTANTS, LLC,
By: ________________________
Xxxxxx Xxxxxxx
President
Agreed to and Accepted as of the date above.
PRE SETTLEMENT FUNDING CORP.
By: ________________________
Xxxxxx X. Xxxx
President
