EXHIBIT 10.9
XXXXXXXX
CURHAN
FORD & CO.
June 6, 2003
Xxxxx Xxxxx
Chairman & CEO
US Dataworks
0000 Xxxxxxxxx Xx
Xxxxx 000
Xxxxxxx, XX 00000
PERSONAL & CONFIDENTIAL
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XXXXXXXX CURHAN FORD & CO. ADVISORY AGREEMENT
Dear Xxxxx:
Xxxxxxxx Curhan Ford & Co. ("MCF") is pleased to act as financial
advisor to US Dataworks, Inc. (the "Company"). We will assist the Company in its
efforts to obtain financing in the form of a private investment in cash in the
equity of the Company (a "Capital Raising Transaction").
1. SERVICES. In connection with this engagement, MCF will perform the
following service:
(a) CAPITAL RAISING. MCF will introduce the Company to potential
investors who may have an interest in financing the Company. MCF will prepare
the Company for investor visits, management presentations, and will assist as
appropriate with responses to requests for data and other activities. The
Company is free, at its sole discretion, to accept or reject the terms of any
proposed financing.
2. INFORMATION PROVIDED TO MCF. In connection with our engagement, the
Company has agreed to furnish to MCF, on a timely basis, all relevant
information reasonably requested by MCF that is needed by MCF to perform under
the terms of this agreement. During our engagement, it may be necessary for us:
to interview the management of, the auditors for, and the consultants and
advisors to, the Company; to rely (without independent verification) upon data
furnished to us by them; and to review any financial and other reports relating
to the business and financial condition of the Company as we may determine to be
relevant under the circumstances. In this connection, the Company will make
available to us such information as we may reasonably request, including
information with respect to the assets, liabilities, earnings, earning power,
financial condition, historical performance, future prospects and financial
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projections and the assumptions used in the development of such projections of
the Company. We agree that all nonpublic information and any information
identified by you as confidential or proprietary obtained by us in connection
with our engagement will be held only by us, and in strict confidence, and will
be used only by us solely for the purpose of performing our obligations relating
to our engagement as set forth herein.
We do not assume any responsibility for, or with respect to, the
accuracy, completeness or fairness of the information and data supplied to us by
the Company or its representatives. In addition, the Company acknowledges that
we will assume, without independent verification, that all information supplied
to us with respect to the Company will be true, correct and complete in all
material respects and will not contain any untrue statements of material fact or
omit to state a material fact necessary to make the information supplied to us
in light of the surrounding circumstances not misleading. If at any time during
the course of our engagement the Company becomes aware of any material change in
any of the information previously furnished to us, it will promptly advise us of
the change.
3. SCOPE OF ENGAGEMENT. MCF has been engaged by the Company only in
connection with the matters described in this letter agreement and for no other
purpose. We have not made, and will assume no responsibility to make any
representation in connection with our engagement as to any legal matter. Except
as specifically provided in this letter agreement, MCF shall not be required to
render any advice or reports in writing or to perform any other services.
4. TERM OF ENGAGEMENT. Our representation will continue for a period of
six months from the date this letter agreement is executed with MCF; however
either party may terminate the relationship at any time upon thirty days written
notice to the other party. Notwithstanding the foregoing, in the event of
termination or expiration of this agreement, MCF's fees and expenses which are
then due and payable pursuant to paragraph 5 at the time of such termination or
expiration will be paid and the Company's obligation to pay any applicable
Financing Completion Fee in accordance with the terms of paragraph 5(a)(i) will
continue for six months from the date of this letter agreement.
5. FEES AND EXPENSES. The Company agrees to reimburse our reasonable
out-of-pocket expenses incurred during the term of this Letter Agreement upon
presentation of a reasonably detailed statement of expenses (including, but not
limited to, messenger, overnight courier, printing, travel and counsel fees), up
to a maximum of $10,000.
Additional performance-based compensation for our services will be as
follows:
(a) CAPITAL RAISING.
(i) FINANCING COMPLETION FEE. At the time the Capital Raising
Transaction closes, MCF will be paid a cash Financing
Completion Fee equal to 7.5% of the total amount of cash
invested in the Company in exchange for equity in the Company
by the entities listed in APPENDIX A (the "Investors");
provided that the Company shall have no obligation to pay any
fees to MCF in the event the closing of the Capital Raising
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Transaction occurs on a date more than six months after the
date of this Letter Agreement.
6. INDEMNITY AND CONTRIBUTION. The parties agree to the terms of MCF's
standard indemnification agreement, which is attached hereto as Appendix B and
incorporated herein by reference. The provisions of this paragraph 6 shall
survive any termination of this Agreement.
7. OTHER BUSINESS. The Company understands that if MCF is asked to act
for the Company in any other formal additional capacity relating to this
engagement but not specifically addressed in this letter, such as acting as an
underwriter in connection with the issuance of securities by the Company, then
such activities shall constitute separate engagements and the terms and
conditions of any such additional engagements will be embodied in one or more
separate written agreements, containing provisions and terms to be mutually
agreed upon, including without limitation appropriate indemnification
provisions.
8. OTHER MCF ACTIVITIES. MCF is a full service securities firm engaged
in securities trading and brokerage activities as well as investment banking and
financial advisory services. In the ordinary course of our trading and brokerage
activities, MCF or its affiliates may hold positions, for its own account or the
accounts of customers, in equity, debt or other securities of the Company.
9. COMPLIANCE WITH APPLICABLE LAW. In connection with this engagement,
the Company and MCF will comply with all applicable federal, state and foreign
securities laws and other applicable laws.
10. INDEPENDENT CONTRACTOR. MCF is and at all times during the term
hereof will remain an independent contractor, and nothing contained in this
letter agreement will create the relationship of employer and employee or
principal and agent as between the Company and MCF or any of its employees. MCF
shall have no authority to bind or act for the Company in any respect. It is
understood that MCF responsibility to the Company is solely contractual in
nature and that MCF does not owe the Company, or any other party, any fiduciary
duty as a result of its engagement.
11. BEST EFFORTS ENGAGEMENT FOR CAPITAL RAISING. It is expressly
understood and acknowledged that MCF's engagement for Capital Raising does not
constitute any commitment, express or implied, on the part of MCF or of any of
its affiliates to purchase or place the Company's securities or to provide any
type of financing and that any Capital Raising engagement will be conducted by
MCF on a "best efforts" basis. It is further understood that MCF's services
hereunder shall be subject to, among other things, satisfactory completion of
due diligence by MCF, market conditions, the absence of adverse changes to the
Company's business or financial condition, approval of MCF's internal commitment
committee and any other conditions that MCF may deem appropriate for placements
of such nature. In addition the Company is not obligated to conclude any Capital
Raising Transaction and would not have to pay any Financing Completion Fees if a
Capital Raising Transaction is not completed during the term of this letter
agreement.
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12. SUCCESSORS AND ASSIGNS. This letter agreement and all obligations
and benefits of the parties hereto shall bind and shall inure to their benefit
and that of their respective successors and assigns. The indemnity and
contribution provisions incorporated into this letter agreement are for the
express benefit of the officers, directors, employees, consultants, agents and
controlling persons of MCF and their respective successors and assigns.
13. ANNOUNCEMENTS. Upon the closing of a Capital Raising Transaction
for which MCF is eligible to receive a Financing Completion Fee hereunder, the
Company grants to MCF the right to place customary announcement(s) of this
engagement in certain newspapers and to mail announcement(s) to persons and
firms selected by MCF, and all costs of such announcement(s) will be borne by
MCF; provided that all such announcements shall comply with applicable law and
be consented to in writing by the Company (which consent shall not be
unreasonably withheld).
14. ARBITRATION. Any dispute between the parties concerning the
interpretation, validity or performance of this letter agreement or any of its
terms and provisions shall be submitted to binding arbitration in San Francisco
County, California, before the American Arbitration Association, and the
prevailing party in such arbitration shall have the right to have any award made
by the arbitrators confirmed by a court of competent jurisdiction. The
provisions of Section 1283.05 of the California Code of Civil Procedure,
authorizing the taking of depositions and obtaining discovery, are incorporated
herein by this reference and shall be applicable to any such arbitration.
15. GENERAL PROVISIONS. No purported waiver or modification of any of
the terms of this letter agreement will be valid unless made in writing and
signed by the parties hereto. Section headings used in this letter agreement are
for convenience only, are not a part of this letter agreement and will not be
used in construing any of the terms hereof. This letter agreement constitutes
and embodies the entire understanding and agreement of the parties hereto
relating to the subject matter hereof, and there are no other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter hereof. No representation, promise, inducement or statement of
intention has been made by either of the parties hereto which is to be embodied
in this letter agreement, and none of the parties hereto shall be bound by or
liable for any alleged representation, promise, inducement or statement of
intention, not so set forth herein. No provision of this letter agreement shall
be construed in favor of or against either of the parties hereto by reason of
the extent to which either of the parties or its counsel participated in the
drafting hereof. If any provision of this letter agreement is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, the remaining
provisions hereof shall in no way be affected and shall remain in full force and
effect. In case of any litigation or arbitration between the parties hereto, the
prevailing party shall be entitled to its reasonable legal fees. This letter
agreement is made and entered in the State of California, and the laws of that
state relating to contracts made in, and to be performed entirely in, the State
shall govern the validity and the interpretation hereof. This letter agreement
may be executed in any number of counterparts and by facsimile signature.
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If the foregoing correctly sets forth your understanding of our
agreement, please sign the enclosed copy of this letter and return it to MCF,
whereupon it shall constitute a binding agreement between us.
Very truly yours,
XXXXXXXX CURHAN FORD & CO.
By:/s/ D. Xxxxxxxx Xxxxxxxx
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D. Xxxxxxxx Xxxxxxxx
Chairman & CEO
The undersigned hereby accepts, agrees to and becomes party to the
foregoing letter agreement, effective as of the date first written above.
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Chairman & CEO
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APPENDIX A - THE INVESTORS
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Bonanza Capital
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APPENDIX B-INDEMNIFICATION AGREEMENT
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The Company agrees to indemnify and hold harmless MCF and its officers,
directors, employees, consultants, attorneys, agents and controlling persons
(within the meaning of Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended) (MCF and each
such other persons are collectively and individually referred to below as an
"Indemnified Party") from and against any and all loss, claim, damage, liability
and expense whatsoever, as incurred, including, without limitation, reasonable
costs of any investigation, legal and other fees and expenses incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted, to which the Indemnified Party may become
subject under any applicable federal or state law (whether in tort, contract or
on any other basis) or otherwise, and related to the performance by the
Indemnified Party of the services contemplated by this letter agreement and will
reimburse the Indemnified Party for all reasonably incurred expenses (including
reasonable legal fees and expenses) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened claim
or any action or proceeding arising therefrom, whether or not the Indemnified
Party is a party and whether or not such claim, action or proceeding is
initiated or brought by the Company. The Company will not be liable under the
foregoing indemnification provision to the extent that any loss, claim, damage,
liability or expense is found in a final judgment by a court or arbitrator, not
subject to appeal or further appeal, to have resulted from the Indemnified
Party's bad faith, willful misconduct or gross negligence. The Company also
agrees that the Indemnified Party shall have no liability (whether direct or
indirect, in contract, tort or otherwise) to the Company related to, or arising
out of, the engagement of the Indemnified Party pursuant to, or the performance
by the Indemnified Party of the services contemplated by, this letter agreement
except to the extent that any loss, claim, damage, liability or expense is found
in a final judgment by a court or arbitrator, not subject to appeal or further
appeal, to have resulted from the Indemnified party's bad faith, willful
misconduct or gross negligence.
If the indemnity provided above shall be unenforceable or unavailable for any
reason whatsoever, the Company, its successors and assigns, and the Indemnified
Party shall contribute to all such losses, claims, damages, liabilities and
expenses (including, without limitation, all reasonable costs of any
investigation, legal or other fees and expenses incurred in connection with, and
any amounts paid in settlement of, any action, suit or proceeding or any claim
asserted) (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and MCF under the terms of this letter
agreement or (ii) if the allocation provided for by clause (i) of this sentence
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i), but also the
relative fault of the Company and MCF in connection with the matter(s) as to
which contribution is to be made. The relative benefits received by the Company
and MCF shall be deemed to be in the same proportion as the fee the Company
actually pays to MCF bears to the total value of the consideration paid or
committed to be paid to the Company and/or the Company's shareholders in the
Capital Raising Transaction. The relative fault of the Company and MCF shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or by MCF and the
Company's and MCF's relative intent, knowledge, access to information and
opportunity to correct. The Company and MCF agree that it would not be just or
equitable if contribution pursuant to this paragraph were determined by pro rata
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allocation or by any other method of allocation which does not take into account
these equitable considerations. Notwithstanding the foregoing, to the extent
permitted by law, in no event shall the Indemnified Party's share of such
losses, claims, damages, liabilities and expenses exceed, in the aggregate, the
fee actually paid to the Indemnified Party by the Company.
The Indemnified Party will give prompt written notice to the Company of any
claim for which it seeks indemnification hereunder, but the omission to so
notify the Company will not relieve the Company from any liability which it may
otherwise have hereunder except to the extent that the Company is damaged or
prejudiced by such omission or from any liability it may have other than under
this Appendix B. The Company shall have the right to assume the defense of any
claim, lawsuit or action (collectively an "action") for which the Indemnified
Party seeks indemnification hereunder, subject to the provisions stated herein
with counsel reasonably satisfactory to the Indemnified Party (it being
expressly understood that Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, is hereby deemed counsel reasonably satisfactory to the Indemnified
Party.) After notice from the Company to the Indemnified Party of its election
so to assume the defense thereof, and so long as the Company performs its
obligations pursuant to such election, the Company will not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. The Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof at its own expense; provided, however, that
the reasonable fees and expenses of such counsel shall be at the expense of the
Company if the named parties to any such action (including any impleaded
parties) include both the Indemnified Party and the Company and the Indemnified
Party shall have reasonably concluded, based on advice of counsel, that there
may be legal defenses available to the Indemnified Party which are different
from, or in conflict with, any legal defenses which may be available to the
Company (in which event the Company shall not have the right to assume the
defense of such action on behalf of the Indemnified Party, it being understood,
however, that the Company shall not be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for all Indemnified Parties
in each jurisdiction in which counsel is needed). Despite the foregoing, the
Indemnified Party shall not settle any claim without the prior written approval
of the Company, which approval shall not be unreasonably withheld, so long as
the Company is not in material breach of this Appendix B. Also, each Indemnified
Party shall make reasonable efforts to mitigate its losses and liabilities.
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ADDENDUM TO
XXXXXXXX CURHAN FORD & CO.
ADVISORY AGREEMENT
THIS ADDENDUM, entered into on this second day of October, 2003, by and between
Xxxxxxxx Curhan Ford and Company ("MCF") and US Dataworks, Inc., a Nevada
corporation (the "Company") shall amend and restate certain section of that
certain advisory agreement entered into by MCF and the Company dated June 6,
2003 (the "Advisory Agreement"). Only those sections specifically described
shall be amended and restated and all other provisions of the Advisory Agreement
shall remain unchanged.
THE FOLLOWING SECTION SHALL BE AMENDED AS FOLLOWS:
I. Insert new subsection 5(a)(ii):
5. Fees and Expenses.
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a. Capital Raising.
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(ii) ADJUSTED COMPLETION FEE. As MCP and the Company may
agree, from time-to-time during the tam of fhis
Advisory Agreement, the Financing Completion Fee may
be adjusted for certain Investors, as specifically
listed in Appendix A.
II. Add the following Investors to Appendix A:
APPENDIX A - The Investors
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Bonanza Capital
Bonanza Master Fund, Ltd.
Icon Investors, Ltd.
D. Xxxxxxxx Xxxxxxxx
Xxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxxxxx
Zero-Thirty-three Fund
Xxxxxxx Xxxxx
Adjusted Completion Fee:
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Xxxxxxx Xxxxxx Xxxxxx Group (one and one-half percent (1.5%))
MCF and the Company hereby accept and agree to the aforementioned amendments to
the Advisory Agreement as of the date herein ascribed.
XXXXXXXX CURHAN FORD & CO. US DATAWORKS, INC.
/s/ Xxxxx Xxxxxx /s/ Xxxx X. Xxxxxx
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By: Its authorized representative By: Its authorized representative
Managing Director VP & General Counsel
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Title Title
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