Knightsbridge Holdings, LLC, ("Knightsbridge") is pleased to be retained on the terms and conditions set forth in this letter of engagement ("Engagement Letter") as a consultant to your company, CMARK, International, Inc. (the "Company"), collectively...
Exhibit
10.7
November
27, 2006
CMark
International, Inc.
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Attn:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
Gentleman:
Knightsbridge
Holdings, LLC, ("Knightsbridge") is pleased to be retained on the terms and
conditions set forth in this letter of engagement ("Engagement Letter") as
a
consultant to your company, CMARK, International, Inc.
(the "Company"), collectively (the “Parties”), to assist in a variety of areas
relating to the financial, strategic, and related developmental growth of
the
Company (the "Engagement").
1. Services
of Knightsbridge.
For
the
Term of Engagement (as hereinafter defined), and with your general knowledge
and
consent, we agree to provide to the Company a range of consultative and related
services which may, but which will not necessarily, include the following:
(i)
identifying, evaluating and advising in relation to the Company's current
structural (including business model), financial, operational, managerial,
strategic and other needs and objectives, (ii) preparing and coordinating
with
the Company and others in the development of business plans, investor
presentations and financial models, (iii) identifying potential merger,
acquisition, divestiture, consolidation or other combination ("M&A
Transaction") opportunities and negotiating, structuring and advising in
connection with potential M&A Transactions, (v) advising and assisting the
Company in connection with the preparation of any registration statements,
periodic or other SEC reports or proxies, and (vi) coordinating with, and
advising in connection with the activities of, Outside Professionals, including
without limitation attorneys, accountants, market professionals,
etc.
2. Term
of Engagement.
The
Engagement shall be effective for a period of twelve (12) months commencing
on
the date first appearing above (the "Term of Engagement"). After the
Term of Engagement expires, the Engagement shall automatically renew on a
month-to-month basis, subject to the right of the Company and/or Knightsbridge
to terminate the Engagement as of the end of any given month by giving written
notice to the other party at least thirty (30) days notice ("Termination").
As
clarification, said right of termination shall commence upon the thirteen
month
anniversary of this signing Agreement. Notwithstanding the foregoing,
the Company shall not have the right to cancel this Agreement until such
time as it has fulfilled all its obligations under any and all outstanding
Agreements with Advantage Fund I, LLC or Trafalgar Capital Advisors, LLC,
their
assignees, or any other investors who fund the investments more fully described
on the Exhibit ‘A’ attached hereto between the
Parties. Notwithstanding the foregoing, should funding not
occur as a result of the transactions more fully described on Exhibit ‘A’
attached hereto (the “Transactions”), then the Company, at its option,
shall have the right to cancel this agreement with no obligation.
Funding shall be defined as requiring execution by the company, in its sole
discretion, of the term sheets described in Exhibit ‘A’ and the required due
diligence being completed and accepted by the funding source so as to allow
funds to be available to the Company at its sole discretion.
1
3. Compensation.
In
consideration for the services rendered by Knightsbridge to the Company pursuant
to the Engagement (and in addition to the expenses provided for in Paragraph
4
hereof), and throughout the Term of Engagement, the Company shall compensate
Knightsbridge as follows:
3.1.1 Monthly
Retainer. The Company shall remit to Knightsbridge a monthly
retainer (the “Retainers”) in the amount of $5,000.00 per month due and payable
on the first of each month during the Term of this
Agreement. Knightsbridge, may, at its option, take payment in the
form of registered shares of common stock using a formula that divides the
amount due by 90% of the closing bid price of the Company’s common stock as of
the date the invoice is due and payable. Knightsbridge shall, accrue
the Retainers due hereunder for the amount of time prior to the first funding
received pursuant to the transactions more fully described on Exhibit ‘A’
attached hereto Should the Transactions described on Exhibit ‘A’ not be funded
(as defined above) the Company shall have no obligation under this
section.
3.1.2 Equity-Based
Compensation. Company and Knightsbridge agree that at the time of
the first funding received pursuant to the transactions more fully described
on
Exhibit ‘A’ attached, Knightsbridge shall receive 1,000,000 shares of
the common shares of the Company. The shares owned by Knightsbridge and its
financing partners shall carry full ratchet anti-dilution provisions for
one
year from the date of issuance, with application of such anti-dilution rights
applied at the time of any material new issuance by the Company or every
90 days
during such period. Company shall file a registration statement
covering 150% of the shares underlying the balance of the shares within 90
days
from the date of the latest closing of the Transactions. Company
shall use its best efforts to enable the registration statement to become
effective at the earliest possible time. The Expenses relating to the
filing of such registration statement shall be borne by the
Company.
3.2.1 Financing
Transactions (Knightsbridge Introduction). For purposes of any
Financing Transactions involving any Financing Source directly or indirectly
to
the Company by Knightsbridge, and whether occurring during the Term of
Engagement or during a period ending two (2) years following Termination,
Additional Compensation shall be payable to Knightsbridge upon the closing
thereof in accordance with the following schedule where "Consideration" shall
mean (i) the total amount of gross proceeds received by, or otherwise
deliverable to, the Company without condition as part of any such Financing
Transaction, and (ii) any common stock or other securities of the Company
(including without limitation any warrants, options and/or convertible
securities) issued or otherwise transferred as a direct or indirect part
of such
Financing Transaction. Debt financing shall include but not be
limited to any on or off balance sheet financing, mortgages, debentures,
notes,
factoring, receivables financing, or credit facilities introduced directly
or
indirectly to the Company by Knightsbridge. Financing
transactions in which securities convert into Common Stock of the Company
shall,
for purposes under this sub-section, be deemed to have been funded using
the
Debt Financing schedule below and subsequently they shall be deemed to have
used
the Equity Financing schedule below (Company is only responsible for the
difference between the two fees upon conversion) as of the date upon which
these
securities convert to Capital Stock of the Company.
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| (i) | Consideration | Amount of Additional Compensation |
| Equity Financing: | ||
| $-0- to $1,000,000 | 4% | |
| $1 million $5 million | 3% of Consideration | |
| $5 million+ |
$160,000
+ 1.5% of Consideration in excess of $5
million for equity financing.
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| Debt Financing | ||
| $-0- to $1,000,000 | 3.5% | |
| $1 million to $5 million | 3.0% of Consideration | |
| $5 million+ |
$155,000
+ 1% of Consideration in excess of $5 million
for debt financing. And;
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| (ii) | Any Securities issued by or to the Company: 5% (in kind) | |
3.2.2 M&A
Transactions (Knightsbridge Introduction). For purposes of any
M&A Transactions involving any entity or entities originally introduced
directly or indirectly to the Company by Knightsbridge, and whether occurring
during the Term of Engagement or during a period ending two (2) years following
Termination, Additional Compensation shall be payable to Knightsbridge upon
the
closing thereof in accordance with the following schedule where "Consideration"
shall mean the total of all cash, assets (including without limitation any
real
property, personal property and intellectual property) common stock or other
securities (including without limitation any warrants, options and/or
convertible securities) paid by or to the Company or its shareholders, and
shall
further include (a) any commercial bank or other indebtedness of the
Company that is repaid or for which the responsibility to pay is assumed
by the
Company in connection with such M&A Transaction, (b) the greater of the
stated value or the liquidation value of preferred stock of the Company that
is
assumed or acquired by the Company that is not converted into common stock
upon
the consummation of such transaction, (c) the value of any net operating
losses
transferred as part of the M&A Transaction and from which a party to such
transaction expects at the time of closing to benefit, and (d) future
payments for which the Company is obligated either absolutely or upon the
attainment of milestones or financial results ("Company Future
Payments"). Any Additional Compensation payable as a result of
Company Future Payments shall be paid at closing and shall be valued at the
present value of the Company Future Payments. For the purpose of calculating
the
present value, the Company and Knightsbridge agree to discount all Company
Future Payments by a discount factor equal to 15% per annum, and where
necessary, to use the projections which have been provided by the Company
in the
course of the M&A Transaction to quantify these amounts and their
timing. Should Knightsbridge not be responsible for the
entity or entities introduced to the Company under this section and should
the
Company wish Knightsbridge to assist in structuring, negotiating the
transaction, etc., Knightsbridge’s compensation shall be at a rate equal to 50%
of that delineated below.
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| Consideration | Amount of Additional Compensation |
| $-0- to $500,000 | $30,000 (minimum) |
| $500,001 to $5 million | 5% of Consideration |
| $5 million+ | $250,000 +3.0% of Consideration in excess of $5million |
4. Expenses.
In
addition to any Engagement Retainers and Additional Compensation payable
hereunder, and without regard to whether any Compensable Events occur hereunder,
the Company shall reimburse Knightsbridge for all fees approved by an officer
of
the Company, relating to Knightsbridge’s travel and out-of-pocket expenses
reasonably incurred in connection with the services performed by Knightsbridge
pursuant to this Engagement Letter, including without limitation, hotel,
food
and associated expenses and long-distance telephone calls. Said
expenses shall not exceed $500 in any 30-day period of the term unless approved
by an officer, director or other authorized designee of the
Company. Knightsbridge agrees to accrue any and all approved expenses
until such time as the Transactions are consummated.
5. Procedure
for Initiating Discussions.
In
order
to coordinate our efforts with respect to a possible Transaction satisfactory
to
the Company, during the period of our engagement hereunder, the Company and
its
representatives will advise Knightsbridge prior to initiating discussions
regarding a Transaction. In the event the Company or its management
receives an inquiry regarding a Transaction, it will advise Knightsbridge
of
such inquiry in order that Knightsbridge may confirm there is no duplication
of
efforts and if requested, assist the Company in evaluating such prospective
Transaction and assist the Company in any resulting negotiations.
6. Non-Exclusivity
of Knightsbridge Services.
It
is
understood and acknowledged by the Company that Knightsbridge presently has,
and
anticipates having throughout the Engagement Term, other clients for which
it
performs the same or similar services to those to be performed in accordance
herewith, and that Knightsbridge shall be under no obligation under this
Engagement to restrict its ability in any way to perform services for any
other
clients. It is further acknowledged that, by virtue of the nature of
the services to be performed by Knightsbridge hereunder, the value of such
services bear no relation necessarily to the amount of time invested on the
part
of Knightsbridge to the performance of such services, and Knightsbridge,
therefore, shall be under a continuing obligation hereunder to devote only
as
much time to the performance of its services hereunder as deemed appropriate
in
the exclusive discretion of its principal(s).
7. Role
of
Finder.
In
connection with any Financing Transactions hereunder, the Company acknowledges
that Knightsbridge is not a registered broker-dealer under Section 15A of
the
U.S. Securities Exchange Act of 1934, or any similar state law, and that
Knightsbridge cannot, and shall not be required hereunder to, engage in the
offer or sale of securities for or on behalf of the Company. While
Knightsbridge has preexisting relationships and contacts with various investors,
registered broker-dealers and investment funds, Knightsbridge's participation
in
any actual or proposed offer or sale of Company securities shall be limited
to
that of an advisor to the Company and, if applicable,
a "finder" of investors, broker-dealers and/or funds. The Company acknowledges
and agrees that the solicitation and consummation of any purchases of the
Company's securities shall be handled by the Company or one or more NASD
member
firms engaged by the Company for such purposes.
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8. Referral
Fees.
Any
referral fees payable in connection
with any Compensable Transactions shall be the exclusive responsibility of,
and
shall be paid by Knightsbridge.
9. Cooperation
by
Company.
In
order
to enable Knightsbridge to provide the services requested, the Company agrees
to
provide to Knightsbridge, among other things, all information reasonably
requested or required by Knightsbridge including without limitation information
concerning historical and projected financial results with respect to the
Company and its subsidiaries and possible and known litigious, environmental
and
contingent liabilities. The Company also agrees to make available to
Knightsbridge such representatives of the Company, including, among others,
directors, officers, employees, outside counsel and independent certified
public
accountants, as Knightsbridge may reasonably request.
10. Reliance
by
Knightsbridge on Accuracy of Information; 12(b)5
Representation.
The
Company recognizes and acknowledges that, in advising the Company and in
fulfilling the Engagement hereunder, Knightsbridge will use and rely on data,
material and other information furnished to Knightsbridge by the
Company. The Company agrees that Knightsbridge may do so without
independently verifying the accuracy or completeness of such data, material
or
other information. The Company represents and warrants that any such
data, material or information shall be true and accurate and shall not, as
of
the time communicated, contain any untrue statement of a material fact or
omit
to state a material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
11. Confidentiality.
If
any of
the data, material or other information is non-public or confidential when
revealed or otherwise shared with representatives of Knightsbridge, and
identified in writing as such at the time it is revealed or
shared ("Confidential Information"), Knightsbridge and its officers,
directors, employees, agents and associates shall hold all Confidential
Information in complete and strict confidence and will not, without prior
written consent of the Company, in each instance, disclose any Confidential
Information, in whole or part, to any other person or for any other purpose
than
is expressly approved by the Company in writing. To the extent that
disclosure of Confidential Information is approved by the Company in writing,
excepting information required to be disclosed by legal process, law or
regulation. Knightsbridge agrees that each party or individual to
whom such disclosure is made shall be informed of the confidential nature
of the
information disclosed and be obligated to sign standard non-disclosure
agreements.
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12. Indemnification.
Each
party (an "Indemnifying Party") hereby agrees to indemnify and hold the other
party and its respective affiliates, directors, officers, employees and agents
(collectively, the "Indemnified Parties") harmless from, and to reimburse
each
of the Indemnified Parties for, any loss, damage, deficiency, claim, obligation,
suit, action, fee, cost or expense of any nature whatsoever (including, but
not
limited to, reasonable attorney’s fees and costs) arising out of, based upon or
resulting from any breach of any of the representations, warranties, covenants,
agreements or undertakings of the Indemnifying Party contained in or made
pursuant to this Engagement Letter.
13. Miscellaneous.
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(a)
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This
Engagement Letter constitutes the entire agreement and understanding
of
the parties hereto, and supersedes any and all previous agreements
and
understandings, whether oral or written, between the parties with
respect
to the matters set forth herein.
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(b)
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Any
notice or communication permitted or required hereunder shall be
in
writing and shall be deemed sufficiently given if hand-delivered
via
courier or overnight service or sent (i) postage prepaid by registered
mail, return receipt requested, to the respective parties as set
forth
below, or to such other address as either party may notify the
other of in
writing:
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If
to Knightsbridge,
to: Knightsbridge
Holdings, LLC.
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Attn:
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the Company,
to: CMark
International, Inc.
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Attn:
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
(c)
This
Engagement Letter shall be binding upon and inure to the benefit of each
of the
parties hereto and their respective successors, legal representatives and
assigns.
(d)
The Company represents that it has
the power to enter into this Engagement Letter and to carry out its obligations
hereunder. This Engagement Letter constitutes the valid and
binding obligation of the Company and is enforceable in accordance with its
terms. The Company further represents that this Engagement Letter
does not conflict with or breach any agreement to which it is subject or
by
which it is bound.
(e)
This Engagement Letter may be
executed in any number of counterparts, each of which together shall constitute
one and the same original document.
(f)
No
provision of this
Engagement Letter may be amended, modified or waived, except in writing signed
by all of the parties hereto.
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(g)
This Engagement Letter shall be
construed in accordance with and governed by the laws of the State of Florida,
without giving effect to its conflict of law principles. The parties
hereby agree that any dispute which may arise between them arising out of
or in
connection with this Engagement Letter shall be adjudicated before a court
located in Dade County Florida, and they hereby submit to the exclusive
jurisdiction of the courts of the State of Florida located in Dade County,
Florida and of the federal courts in the Southern District of Florida with
respect to any action or legal proceeding commenced by any
party. Company agrees to waive a trial by jury for any dispute
requiring adjudication before a court of law.
(h)
The
Company hereby acknowledges that it shall bear the burden of proof in any
action
or proceeding involving a claim by Knightsbridge to any Additional Compensation
due hereunder arising out of any Compensable Event involving a third party
claimed by Knightsbridge to have been originally introduced to the Company
by
Knightsbridge.
If
the
foregoing correctly sets forth the understanding between Knightsbridge and
the
Company with respect to the foregoing, please so indicate by signing in the
place provided below, at which time this Engagement Letter shall become a
binding agreement.
KNIGHTSBRIDGE
HOLDINGS, LLC.
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
Managing
Member
Accepted
and Agreed:
CMARK
INTERNATIONAL, INC.
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇.
Title: President
Domestic
Wiring Instructions:
Knightsbridge
Holdings, L.L.C.
Wachovia
Bank
ABA
#
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A/C
#
2000011114718
Attn:
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7
EXHIBIT
‘A’
This
Exhibit ‘A’, dated November 27, 2006 shall further memorialize the understanding
between Knightsbridge Holdings, L.L.C. d/b/a Knightsbridge Capital
(“Knightsbridge”) and Cmark International, Inc., (the “Company”), collectively
(the “Parties”) and shall be considered an integral part of the Agreement
between the Parties of even date.
Under
the
Agreement Knightsbridge and its financing partners shall be granted equity
ownership of the fully diluted common shares of the Company as part of the
funding (as defined in the Agreement) of the Transactions more specifically
described below. All of the items delineated below shall occur after
the structure of the funding as defined by item 1 below. In
consideration of this equity award, Knightsbridge shall consummate the
following:
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1.
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Obtain
for the Company, a senior debt facility in the amount of 3 million
to 7.5
million dollars.
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2.
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Obtain
for the Company a subordinated debt facility will be provided in
the
amount to be determined by discussion between the lender and the
Company.
The disbursement of the funding above shall be based upon milestones
to be
discussed with the Company and set by the
lender.
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3.
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Knightsbridge
shall deliver a term sheet on commercially acceptable terms for such
a
facility within 72 hours from the execution of the Agreement between
the
Parties. Execution by the company and the Investor of the term
sheet shall be deemed “consummation” of this transaction as defined in the
Agreement, however funding, as defined in the Agreement, is
understood to be at such point after due diligence is completed and
funds
are available to be drawn by the Company at its sole
discretion.
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4.
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Knightsbridge
shall assist the company’s officers in establishing their employment
agreements as well as other incentive based employee and consultant
benefits plans.
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5.
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While
not specific to the Transactions described herein, Knightsbridge
shall
assist the Company with its corporate organization efforts, and where
applicable, shall assist in the Company’s acquisition as well as bring to
the Company additional acquisitions and business
opportunities.
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6.
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Knightsbridge
shall assist the Company in the rationalization of the Company’s capital
structure. The Company agrees that it will enter into a comprehensive
investor relations program. It is understood that this may be used
to
retire some of the debt held by senior management. Knightsbridge
will also
assist the company in transitioning from the pink sheets to the OTC
Bulletin board.
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Knightsbridge
shall use its best efforts, resources to coordinate all of the above and shall
begin immediately upon execution of the Agreement between the Parties of even
date.
Please
acknowledge your understanding and acceptance of the foregoing by initialing
where indicated below:
_______ Cmark
International, Inc.
_______ Knightsbridge
Holdings, LLC
A-1