LETTER OF AGREEMENT
This letter will confirm and constitute the agreement ("Agreement") as
of the 16th day of June, 1998 between Capital Title Group, Inc. (hereinafter
"Capital Title" or the "Company") and ▇▇▇▇▇▇ Capital Corporation ("MCC")
pursuant to which MCC will furnish to the Company certain management consulting,
financial advisory and investor relations services.
1. MCC SERVICES.
MCC will perform the following services for the Company: (i) financial
consultation with respect to the Company's funding requirements and projected
associated costs to include preparation of reports and valuation meaningful to a
private placement or public equity funding; (ii) advice and consultation with
respect to financial structure, markets and placement of any equity offering;
and (iii) investor relations services.
It is expressly acknowledged and agreed by the parties hereto that
MCC's obligations do not insure the successful negotiation of or obtaining of
any type of Financing for the Company and any efforts by MCC for obtaining
Funding for the Company shall be done on a "BEST EFFORTS" basis only. MCC is not
a NASD registered broker/dealer.
It is expressly acknowledged and agreed by the parties hereto that MCC
and employees of MCC are independent contractors and are not employees or
officers of the Company.
2. PROVISION OF INFORMATION BY THE COMPANY.
The Company acknowledges that MCC, in order to perform its services
effectively under this Agreement and to satisfy such obligations, requires
prompt receipt of all material information with respect to the Company, its
operations and prospects. Accordingly, the Company will furnish to MCC copies of
all financial statements, tax returns, reports and agreements executed in
relation to the Company's business. The Company recognizes the necessity of
promptly notifying, and will promptly notify, MCC of all material developments
concerning the Company, its business and prospects and will supply MCC with
information sufficient to enable MCC to make a determination as to its
compliance with its own procedures as well as any legal requirements.
MCC will have access to the Company's legal and accounting
professionals and with prior approval from the Company access to outside legal
counsel and accounting professionals at the Company's expense.
Capital Title Group, Inc.
June 16, 1998
Page 2
MCC will accept and hold such Information in complete confidence for
their use as contemplated hereby. The confidentiality obligations assumed by MCC
hereunder will not apply to any Information which is presently in or
subsequently becomes part of the public domain or is otherwise generally known
or is obtained from any third party which is in possession of such Information
through no fault of MCC.
3. COMPENSATION , TERM AND FEE WAIVER.
For services rendered under this Agreement, MCC shall receive the following
compensation:
A. The Company will pay to MCC a monthly fee of $6,500 as compensation
for Investor Relations Services starting with the renewal date of this
Agreement and continuing thereafter on a monthly basis for a period of
twenty-four (24) consecutive months;
B. Out-of-pocket expenses incurred by MCC in connection with the services
to be performed by it hereunder will be payable by the Company upon
submission by MCC of monthly invoices delineating such expense. Any
expense over $1,000 must be approved by the Company in advance;
C. MCC will receive a success fee ("Success Fee") in the form of a cash
payment of the gross proceeds of any private financing ("Financing")
including any form of equity, convertible debt, debt with warrants,
debt with equity incentives to the lender. Success Fee percentages are
based on the type of Financing transaction completed on behalf of
Capital Title with private placement fees being five (5%) percent of
the gross proceeds for any Private Placement Funding payable upon
receipt of the net proceeds by the Company. MCC does not receive fees
for traditional bank debt arranged directly by the Company;
D. MCC will receive a Success Fee in the form of a cash payment on the
gross proceeds of a public stock offering, payable upon the receipt of
the net proceeds by the Company. The Success Fee will be based on the
following fee schedule applicable to the gross proceeds received by
the Company:
Capital Title Group, Inc.
June 16, 1998
Page 3
MAXIMUM
GROSS PROCEEDS FEE PERCENT FEE AMOUNT
-------------- ----------- ----------
$1 up to 10,000,000 million 2.75 percent $275,000
$1 up to 20,000,000 million 2.25 percent $450,000
$1 up to 30,000,000 million 1.75 percent $525,000
$1 to in excess of 30,000,000 1.25 percent
E. Capital Title shall have sole discretion in determining what
constitutes an acceptable Financing as contemplated by this Agreement.
MCC shall earn the Success Fee only upon the closing or receipt of
funds from a Financing as described in 3.C. or 3.D., above, and not
merely for presenting a financing option or prospective investor which
in Capital Title sole discretion is unacceptable;
F. MCC will receive compensation, the amount to be mutually agreed upon
by the Company and MCC, for issuance of an update to the Due Diligence
Report dated January 30, 1998, in the event such update is requested
by the Company or any third party; and
G. MCC agrees to waive any fees due from the ▇▇▇▇, ▇▇▇▇▇ Construction and
▇▇▇ & Associates equity private placement of common stock associated
with the Company's corporate headquarters real estate transaction.
4. EXCLUSIVITY.
A. The Company acknowledges that the Company is a party to that certain
agreement dated April 13, 1998, between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ("SMM") whereby SMM has been engaged by the Company as its
co-exclusive financial advisor and investment banker (the "SMM
Agreement"). The Company further acknowledges that its officers will
not engage any other person or entity to serve as its agent or
representative to provide services similar to those to be provided by
MCC and SMM through the term of this Agreement without the prior
written consent of MCC.
B. If for a period of twenty four (24) months following the successfully
closing a Financing, as contemplated under this Agreement, Capital
Title desires to commence any Transaction (other than traditional bank
debt), ▇▇▇▇▇▇ Capital Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ as
co-financial advisors to the Company shall have the right of first
refusal to act as Capital Title's co-financial advisors, to arrange
for placement agents or underwriters, as the case may be, with respect
to any such Transaction or Transactions. If Capital Title decides to
pursue any such Transaction, and MCC and SMM exercise their right of
first refusal provided hereunder, Capital Title, MCC and SMM will
enter into an agreement appropriate to the circumstances.
Capital Title Group, Inc.
June 16, 1998
Page 4
5. COMPANY COVENANT RE MCC EMPLOYEES.
The Company recognizes that client service officers and other employees
of MCC are necessary for the continued servicing by MCC of its several clients.
Accordingly, the Company will not, during the term of this Agreement, and for a
period of two years after its termination, employ any client service officer,
account executive or other employee of MCC in any capacity.
6. ASSIGNMENT.
MCC recognizes the personal nature of the services to be performed by
it and shall not transfer or assign to any other person, firm or corporation its
responsibilities and obligations under this Agreement without prior approval of
the Company. In the event that a merger, sale of assets or change of control of
the Company or MCC shall occur, this Agreement shall be binding upon the
successor and assigns of such party.
7. INTEGRATION.
This writing constitutes the full and complete agreement of the
parties, which Agreement may not be modified by any method other than another
writing signed by the parties.
8. HEADINGS.
The paragraph headings have been inserted for convenience and shall not
be construed in a manner contrary to the text of this Agreement.
9. ATTORNEY FEES.
In the event of any action or proceeding to enforce the provisions of
this Agreement, the prevailing party shall be entitled to its reasonable
attorney fees, such fees to be set by a judge and not by a jury and to be
included in any judgment entered in such action or proceeding.
Capital Title Group, Inc.
June 16, 1998
Page 5
10. INDEMNIFICATION.
Both MCC and the Company agree to indemnify the other company's
respective directors, officers and employees against all losses and claims as is
customary in advisory engagements. The provisions of this section shall survive
any termination of the engagement that is the subject of this letter.
11. PUBLICITY.
Capital Title approves the use by MCC of the Company's name or logo in
publicity that includes tombstones and advertising related materials used
exclusively by MCC. MCC agrees to obtain prior approval, which approval will not
be unreasonably withheld, for the use of the Company's name or logo in any other
circumstance.
12. EFFECTIVE DATE.
This Agreement shall be effective as of the date and year first set
forth above.
AGREED AND ACCEPTED:
Please confirm that the foregoing correctly sets forth our mutual
understanding by signing and returning the copy of this Agreement provided for
that purpose.
Capital Title Agency Inc. ▇▇▇▇▇▇ Capital Corporation
▇▇▇▇▇▇ ▇. Head ▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. Head By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chairman and CEO Title: Chairman and CEO
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Date: Date:
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