Exhibit 10.7
MERGERS AND ACQUISITIONS ADVISORY AGREEMENT
THIS MERGERS AND ACQUISITIONS ADVISORY AGREEMENT is made as of the 27th day
of March, 2001, by and between 4net Software, Inc., a Delaware corporation,
having an address at 00 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxx 00000
(hereinafter referred to as "4net Software"), and Catalyst Financial LLC, a New
York limited liability company, having an address at 00 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to as "Catalyst").
RECITALS:
WHEREAS, 4net Software is publicly traded company engaged in, among
other things, acquiring and operating niche software and Internet solution
companies. 4net Software is interested in seeking out and identifying
prospective target companies for mergers, acquisitions, business
combinations, and similar transactions, and if investigation warrants to
negotiate such a transaction with the target company; and
WHEREAS, Catalyst is an investment banking firm and licensed broker
dealer. 4net Software desires to engage Catalyst to identify prospective
target companies for mergers, acquisitions, business combinations, or
similar transactions, and to advise 4net Software in connection with the
negotiations and financial structure of such transactions.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. Term. The term of this Agreement shall be for three (3) years commencing
on March 27, 2001 and terminating on March 26, 2004 (the "Term"). However,
this Agreement may be terminated by either party on thirty (30) days
written notice.
2. Mergers & Acquisitions Consulting Services. During the Term of the
Agreement, Catalyst shall provide consulting services to 4net Software in
connection with 4net Software's identifying and investigating prospective
target companies for mergers, acquisitions, business combinations and
similar transactions, and, if investigation warrants, advising 4net
Software concerning the negotiation of terms and the financial structure of
such transactions. The services to be provided by Catalyst include but are
not limited to, (i) preparing a document concerning 4net Software which can
be presented to prospective target companies, (ii) identifying and
investigating companies which may be acquisition candidates for 4net
Software, (iii) meeting with prospective target companies on behalf of 4net
Software, (iv) analyzing and evaluating prospective target companies, and
(v) advising 4net Software as to how to structure and finance transactions.
3. Fee for Services. In the event that 4net Software completes a merger,
acquisition business combination or similar transaction, as a result of an
introduction made by Catalyst, during the Term of this Agreement or within
one (1) year from the termination, for any reason, of this Agreement, then
4net Software hereby agrees to pay Catalyst a fee (the "M&A Fee") equal to:
5% of the consideration from $1 and up to $1,000,000 4% of the
consideration in excess of $1,000,000 and up to $2,000,000, plus 3% of the
consideration in excess of $2,000,000 and up to $3,000,000, plus 2% of the
consideration in excess of $3,000,000 and up to $4,000,000, plus 1% of the
consideration in excess of $5,000,000.
The M&A Fee set forth above shall be due and payable by 4net Software to
Catalyst in cash on the closing date of the subject transaction.
For purposes of this Agreement, "consideration" shall mean the value
of the transaction described herein and shall include the aggregate value
of all cash, securities, and other property and consideration of every
kind, including but not limited to assumption and forgiveness of
indebtedness, the amount received under the terms of an "earn-out"
provision, rights to receive periodic payments and all other rights that
may be at any time either (i) transferred or contributed to 4net Software,
its affiliates or shareholders in connection with an acquisition of equity
or assets thereof, or (ii) transferred or contributed by 4net Software, its
affiliates or shareholders in any transaction involving an investment in or
acquisition of any third party, or acquisition of the equity or assets
thereof, by 4net Software or any affiliate thereof, or (iii) transferred or
contributed by 4net Software, its affiliates or shareholders and any other
parties entering into any joint venture or similar joint enterprise or
undertaking with 4net Software or any affiliate thereof. The aggregate
value of all such cash, securities and other property shall be the
aggregate fair market value thereof as determined jointly by Catalyst and
4net Software, or by an independent appraiser jointly selected by Catalyst
and 4net Software. The cost of such independent appraiser shall be borne
entirely by 4net Software.
4. Expenses. 4net Software shall reimburse Catalyst for its out-of-pocket
expenses in connection with the services to be performed hereunder;
provided however, that expenses are approved in writing by 4net Software.
5. Representations of 4net Software. 4net Software hereby represents and
warrants that any and all information supplied hereunder to Catalyst in
connection with any and all services to be performed hereunder by Catalyst
for and on behalf of 4net Software shall be, to the best of 4net Software's
knowledge, true, complete and correct as of the date of such dissemination
and shall not fail to state a material fact necessary to make any of such
information not misleading. 4net Software hereby acknowledges that the
ability of Catalyst to adequately provide services as described herein is
dependent upon the prompt dissemination of accurate, correct and complete
information to Catalyst. 4net Software further represents and warrants
hereunder that this Agreement has been, or will be, duly and validly
authorized by all requisite corporate action; that 4net Software has the
full right, power and capacity to execute, deliver and perform its
obligations hereunder; and that this Agreement, upon execution and delivery
of the same by 4net Software, will represent the valid and binding
obligation of 4net Software and shall be enforceable by Catalyst in
accordance with its terms. The representations and warranties set forth
herein shall survive the termination of this Agreement.
6. Indemnification.
(a) 4net Software hereby agrees to indemnify, defend and hold harmless
Catalyst, its officers, directors, principals, employees, partners,
consultants, affiliates, and shareholders, and their successors and assigns
from and against any and all claims, damages, losses, liability,
deficiencies, actions, suits or proceedings (collectively the "Losses")
arising out of or resulting from: (i) any breach of a representation, or
warranty by 4net Software contained in this Agreement; or (ii) any
activities or services performed hereunder by Catalyst, unless such Losses
were the result of the intentional misconduct or gross negligence of
Catalyst or were the result of any information supplied by Catalyst; or
(iii) any and all costs and expenses (including reasonable attorneys' and
paralegals' fees) related to the foregoing, and as more fully described
below. Catalyst hereby agrees to indemnify, defend and hold harmless 4net
Software, and its officers, directors and shareholders, and their
successors and assigns from and against any and all Losses arising out of
or resulting from (i) the intentional misconduct or gross negligence of
Catalyst, unless such Losses were the result of any information supplied by
4net Software; or (ii) any and all costs and expenses (including reasonable
attorneys' and paralegals' fees) related to the foregoing, and as more
fully described below.
(b) If Catalyst or 4net Software (in each case, the "Indemnified Party")
receives written notice of the commencement of any legal action, suit or
proceeding with respect to which 4net Software or Catalyst (in each case,
the "Indemnifying Party") is or may be obligated to provide indemnification
pursuant to this Section 7, the Indemnified party shall, within thirty (30)
days of the receipt of such written notice, give the Indemnifying Party
written notice thereof (a "Claim Notice"). Failure to give such Claim
Notice within
such thirty (30) day period shall not constitute a waiver by the
Indemnified Party of its right to indemnity hereunder with respect to such
action, suit or proceeding if the Indemnifying Party is not materially
adversely affected by such delay. Upon receipt by the Indemnifying Party of
a Claim Notice from the Indemnified Party with respect to any claim for
indemnification which is based upon a claim made by a third party ("Third
Party Claim"), the Indemnified Party may assume the defense of the Third
Party Claim with counsel of its own choosing, as described below. The
Indemnifying Party and the Indemnified party shall cooperate with each
other in the defense of the Third Party Claim and shall furnish such
records, information and testimony and attend all such conferences,
discovery proceedings, hearings, trial and appeals as may be reasonably
required in connection therewith. The Indemnified Party shall have the
right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of the Indemnifying Party
unless the Indemnifying Party shall not have promptly employed counsel to
assume the defense of the Third Party Claim, in which event such fees and
expenses shall be borne solely by Indemnifying Party. The Indemnifying
Party shall not satisfy or settle any Third Party Claim for which
indemnification has been sought and is available hereunder, without the
prior written consent of the Indemnified Party unless such claim can be
settled entirely for cash and the Indemnified Party shall be given a full
release from all parties in connection therewith. If the Indemnifying Party
shall fail with reasonable promptness either to defend such Third Party
Claim or to satisfy or settle the same, the Indemnified Party may defend,
satisfy or settle the Third Party Claim at the expense of the Indemnifying
Party and the Indemnifying Party shall pay to the Indemnified Party the
amount of any such Loss within ten (10) days after written demand
therefore. The indemnification provisions hereunder shall survive the
termination of this Agreement.
7. Confidentiality. Catalyst agrees that all non-public information
pertaining to the prior, current or contemplated business of 4net Software
are valuable and confidential assets of 4net Software. Such information
shall include, without limitation, information relating to customer lists,
bidding procedures, intellectual property, patents, trademarks, trade
secrets, financing techniques and sources and such financial statements of
4net Software as are not available to the public. Catalyst, its officers,
directors, employees, agents and shareholders shall hold all such
information in trust and confidence for 4net Software and shall not use or
disclose any such information for other than the benefit of 4net Software's
business and shall be liable for damages incurred by 4net Software as a
result of the use or disclosure of such information by Catalyst, its
officers, directors, employees, agents or shareholders for any purpose
other than the benefit of 4net Software's business, either during the term
of the attached Agreement or after the termination or expiration thereof,
except (i) where such information is publicly available or later becomes
publicly available other than through a breach of this Agreement, or (ii)
where such information is subsequently lawfully obtained by Catalyst from a
third party or parties who are not under an obligation of confidentiality
to 4net Software, or (iii) if such information is known to Catalyst prior
to the execution of this Agreement, or (iv) as may be required by law.
These confidentiality obligations shall service termination of this
Agreement.
8. Independent Contractor. It is expressly understood and agreed that
Catalyst shall, at all times, act as an independent contractor with respect
to 4net Software and not as an employee or agent of 4net Software, and
nothing contained in this Agreement shall be construed to create a joint
venture, partnership, association or other affiliation, or like
relationship, between the parties. It is specifically agreed that the
relationship is and shall remain that of independent parties to a
contractual relationship and that Catalyst shall have no right to bind 4net
Software in any manner. In no event shall either party be liable for the
debts or obligations of the other except as otherwise specifically provided
in this Agreement.
9. Amendment. No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is evidence by a written
instrument, executed by the party against which such modification, waiver,
amendment, discharge or change is sought.
10. Notices. All notices, demands or other communications given hereunder
shall be in writing and shall be deemed to have been duly given when
delivered in person or transmitted by facsimile transmission or on the
third calendar day after being mailed by the United States registered or
certified mail, return receipt requested, postage prepaid, to the addresses
herein above first mentioned or to such other address as any party hereto
shall designate to the other for such purpose in the manner hereinafter set
forth.
11. Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other
provision of this Agreement, which will remain in full force and effect,
not will the invalidity, illegality or unenforceability of a portion of any
provision of this Agreement affect the balance of such provision. In the
event that nay one or more of the provisions contained in this Agreement or
any portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed
and enforced as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in
accordance with the laws of the State of Delaware, without application of
the principles of conflicts of laws.
13. Binding Nature. The terms and provision of this Agreement shall be
binding upon and inure to the benefit of the parties, and their respective
successors and assigns.
14. Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures, which shall be deemed as
original signatures. All executed counterparts shall constitute one
Agreement, notwithstanding that all signatories are not signatories to the
original or the same counterpart.
15. Entire Agreement. This Agreement contains all of the understanding and
agreements of the parties with respect to the subject matter discussed
herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
4net Software, Inc. CATALYST FINANCIAL LLC
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxxx Xxxxx, Director Xxxxxx X. Xxxxxxx, President
