Exhibit 10.18
Financial Advisory Services Agreement With (212) Ventures, Inc.
(212) Ventures Engagement Letter
--------------------------------
February 6, 2001
SoftNet Systems, Inc.
000 Xxxxxxxx Xx.
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
1. This letter (the "Agreement") confirms the agreement of SoftNet
Systems, Inc., and its subsidiaries (the "Company") to engage (212)
Ventures, Inc. ("(212)") to serve as financial advisor to the Company
and to render such financial and general business advice as may be
agreed upon by the Company and (212). The engagement shall be for an
initial term of approximately one month, commencing January 22, 2001
and concluding upon the presentation to the Company's Board of
Directors a summary of its analysis made during such time (the
"Discovery Phase") during which (212) will work with the Company to
formulate an initial analysis of the overall business, financial and
legal status of the Company. Upon completion of the Discovery Phase,
(212) shall present the Company's Board of Directors a summary of this
analysis. Upon completion of the Discovery Phase, and unless the
Agreement is terminated pursuant to paragraph 6 below, the Company
agrees to extend the engagement on a month-to-month basis from the date
of the expiration of Discovery Phase (the "Term") during which (212)
will work with the Company to refine the initial analysis and provide
ongoing and additional financial and general business advice to the
Company as may be agreed by (212) and the Company.
2. The services covered by this Agreement do not include transactions such
as business acquisitions or dispositions, financings (debt or equity)
or other corporate transactions (including restructurings or
recapitalizations) in which (212) acts as an agent or participates at
the Company's request and for which it is customary to pay additional
fees to financial advisors. If such a transaction does arise, the terms
of any such additional advisory services provided by (212) shall be
mutually agreed to by (212) and the Company.
3. For (212)'s services hereunder, the Company agrees to pay fees to (212)
in cash as follows:
(a) $50,000 upon execution of this Agreement;
(b) $50,000 upon completion of the initial Discovery Phase of the
Agreement and the commencement of the Term; and
(c) a one-time upfront fee and a non-cancelable monthly retainer fee,
payable on the first day of each 30-day period beginning upon
completion of the Discovery Phase of the Agreement and the
commencement of the Term in an amount to be agreed upon, unless
the Agreement is terminated pursuant to paragraph 14, hereof.
In addition, the Company will reimburse (212), upon its request from
time to time, for the expenses reasonably incurred by (212) in entering
into and performing services pursuant to this Agreement (including,
without limitation, travel, lodging, and business class transportation
expenses, as well as the fees and disbursements of (212)'s counsel).
4. Prior to the end of each of the Discovery Phase and the Term, the
Company will review with (212) the extent of the services (212) has
provided under this Agreement. If it appears that the scope of (212)'s
engagement has required the allocation of more resources than
originally contemplated by the parties and represented by the fee
described in this Section 3, the Company agrees to discuss with (212) a
mutually acceptable adjustment to the fee to reflect such additional
time. (212) will advise the Company as the engagement progresses if it
appears that the time expended by (212) under this Agreement will
exceed the parties' original expectations such that an additional fee
may be warranted.
5. In the event that (212) becomes involved in any capacity in any
claim, suit, action, proceeding, investigation or inquiry
(including, without limitation, any shareholder or derivative
action or arbitration proceeding) (collectively, a "Proceeding")
in connection with any advice or action rendered pursuant to this
Agreement or arising out of the matters contemplated by, referred
to in or relating to this Agreement, the Company will reimburse
(212) for its legal and other expenses (including the cost of any
investigation and preparation) as such expenses are incurred by
(212) in connection therewith. The Company also agrees to
indemnify, defend and hold (212) harmless, to the fullest extent
permitted by law, from and against any losses, claims, damages,
liabilities and expenses in connection with any matter in any way
related to or referred to in this Agreement or arising out of the
matters contemplated by this Agreement, unless it shall be finally
determined by a court of competent jurisdiction in a judgment that
has become final in that it is no longer subject to appeal or
other review, that such losses, claims, damages, liabilities and
expenses resulted solely out of the gross negligence or willful
misconduct of (212). The Company shall, if requested by (212),
assume the defense of any such claim, action, proceeding or
investigation, including the employment of counsel reasonably
satisfactory to (212). If such indemnification were for any reason
not to be available, the Company agrees to contribute to the
losses, claims, damages, liabilities and expenses involved in the
proportion appropriate to reflect the relative benefits received
or sought to be received by the Company and its stockholders and
affiliates and other constituencies, on the one hand, and (212),
on the other hand, in the matters contemplated by this Agreement.
The Company agrees that for the purposes of this paragraph the
relative benefits received, or sought to be received, by the
Company and its stockholders and affiliates, on the one hand, and
the party entitled to contribution, on the other hand, of a
transaction as contemplated shall be deemed to be in the same
proportion that the total value received or paid or contemplated
to be received or paid by the Company or its stockholders or
affiliates and other constituencies, as the case may be, as a
result of or in connection with the transaction (whether or not
consummated) for which (212) has been retained to perform
financial services bears to the fees paid or to be paid to (212)
under this Agreement; provided, that in no event shall the Company
contribute less than the amount necessary to assure that (212) is
not liable for losses, claims, damages, liabilities and expenses
in excess of the amount of fees actually received by (212)
pursuant to this Agreement. For purposes of this paragraph, (212)
shall include all affiliates, each other person, if any,
controlling (212) or any of its affiliates, and their respective
officers, current and former directors, employees and agents, and
the successors and assigns of all of the foregoing persons. The
foregoing indemnity and contribution agreement shall be in
addition to any rights that any indemnified party may have at
common law or otherwise.
6. The Company also agrees that neither (212) nor any of its
affiliates, directors, agents, employees or controlling persons,
in their capacity as such, shall have any liability to the Company
or any person asserting claims on behalf of or in right of the
Company in connection with or as a result of either (212)'s
engagement under this Agreement or any matter referred to in this
Agreement except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the
gross negligence or willful misconduct of (212) in performing the
services that are the subject of this Agreement.
7. None of (i) the name of (212) or any of its principals or
affiliates, (ii) any advice rendered orally or in writing by (212)
to the Company or (iii) any communication from (212) in connection
with the services performed by (212) pursuant to this Agreement
will be quoted or referred to orally or in writing by the Company
or any of its affiliates or any of their agents, without (212)'s
prior written consent. The Company understands that in rendering
services hereunder (212) will be relying, without independent
verification, on the accuracy and completeness of all information
that is or will be furnished to (212) by or on behalf of the
Company or any other person that may furnish information to (212),
and (212) will not in any respect be responsible for the accuracy
or completeness thereof and has no independent obligation to
verify any such information.
8. (212) understands that the Company has disclosed or may disclose
information which has commercial and other value in the Company's
business and is confidential or proprietary in nature (including,
without limitation, trade secrets, patents, patent applications,
copyrights, know-how, processes, ideas, inventions (whether
patentable or not), formulas, computer programs, databases,
technical drawings, designs, algorithms, technology, circuits,
layouts, designs, interfaces, materials, schematics, names and
expertise of employees and consultants, any other technical,
business, financial, customer and product development plans,
supplier information, forecasts, strategies and other confidential
information), which to the extent previously, presently or
subsequently disclosed to the (212) is hereinafter referred to as
"Proprietary Information" of the Company. Proprietary Information
shall only include information that, if provided in a
tangible media, is conspicuously marked as proprietary or
confidential and, in the case of information provided orally,
shall only apply to such information if it is stated to be
proprietary or confidential at the time of disclosure and such
statement and information is summarized in writing within 30 days
after disclosure.
9. (212) agrees (a) to hold the Proprietary Information in confidence
and to take all precautions to protect such Proprietary
Information as (212) employs with respect to its most confidential
materials, but in no case shall (212) employ less than reasonable
precautions, (b) not to disclose any such Proprietary Information
or any information derived therefrom to any third person, (c) not
to make any use whatsoever at any time of such Proprietary
Information except for the sole limited business purposes of
evaluating the Proprietary Information internally to perform
(212)'s work for the Company and (d) not to copy or reverse
engineer, or attempt to derive the composition or underlying
information, structure or ideas of any such Proprietary
Information. Any employee given access to any such Proprietary
Information must have a legitimate "need to know" and shall be
similarly bound in writing.
10. Without granting any right or license, the previous paragraph
shall not apply with respect to any information that (212) can
document (i) is or becomes (through no improper action or inaction
by (212) or any affiliate, agent, consultant or employee)
generally available to the public, or (ii) was in its possession
or known by it prior to receipt from the Company or (iii) was
rightfully disclosed to it by a third party without restriction.
(212) may make disclosures required by court order provided (212)
promptly notifies Company, uses reasonable efforts to limit
disclosure and to obtain confidential treatment or a protective
order and has allowed the Company to participate in the
proceeding.
11. Immediately upon (a) the termination of (212)'s services as
provided in paragraph 14 or (b) a request by the Company at any
time (which will be effective when actually received or three days
after mailed first class postage prepaid to (212)'s address
herein), (212) will turn over to the Company all Proprietary
Information of the Company and all documents or media containing
any such Proprietary Information and any and all copies or
extracts thereof. (212) understands that nothing herein (i)
requires the disclosure of any Proprietary Information of the
Company which shall be disclosed, if at all, solely at the option
of the Company or (ii) requires the Company to proceed with any
proposed transaction or business relationship in connection with
which Proprietary Information may be disclosed.
12. Except to the extent required by law, neither party shall disclose
the existence or subject matter of the negotiations or business
relationship contemplated by this statement.
13. (212) acknowledges and agrees that due to the unique nature of the
Company's Proprietary Information, there can be no adequate remedy
at law for any breach of its obligations hereunder, that any such
breach or any unauthorized use or release of any Proprietary
Information will allow (212) or third parties to unfairly compete
with the Company resulting in irreparable harm to the Company and
therefore, that upon any such breach or any threat thereof, the
Company shall be entitled to appropriate equitable relief in
addition to whatever remedies it might have at law and to be
indemnified by (212) from any loss or harm, including, without
limitation, attorney's fees, in connection with any breach or
enforcement of (212)'s obligations hereunder or the unauthorized
use or release of any such Proprietary Information. (212) will
notify the Company in writing immediately of any such unauthorized
release or other breach of which it is aware.
14. (212)'s services hereunder may be terminated by the Company or
(212) at any time during the Term upon 30 days prior written
notice without additional liability or continuing obligation of
the Company except that fees earned and expenses incurred by (212)
as a result of services rendered prior to the date of termination
shall become immediately payable in full. In addition, at the
expiration of the Discovery Phase, the Company shall have the
right to terminate by delivery of written notice the ongoing
engagement of (212) prior to the commencement of the Term. Unless
such written termination notice is received by (212) within 15
days of the expiration of the Discovery Phase, the Company will be
deemed to have extended the engagement of (212) for the duration
of the Term, and the additional fees pursuant to paragraph 3 will
become due and payable (subject to the first sentence of this
paragraph 14). For the purpose of clarity, the provisions of
paragraphs 5 and 6 hereof shall remain in full force and effect
regardless of any termination pursuant to this paragraph.
15. The Company acknowledges and agrees that (212) has been retained
to act solely as agent to the Company, and not as an agent of any
other person, and the Company's engagement of (212) is not
intended to confer
rights upon any person not a party hereto (including shareholders,
employees or creditors of the Company) as against (212) or its
affiliates, or their respective directors, officers, employees or
agents, successors or assigns. (212) shall act as an independent
contractor under this Agreement, and any duties arising out of its
engagement shall be owed solely to the Company.
16. This Agreement and any claim, counterclaim or dispute of any kind
or nature whatsoever arising out of or in any way relating to this
Agreement ("Claim"), shall be governed by and construed in
accordance with the laws of the State of New York. Except as set
forth below, no Claim may be commenced, prosecuted or continued in
any court other than (a) where (212) is the claimant, the courts
of the State of New York located in the City and County of New
York or in the United States District Court for the Southern
District of New York, or (b) where the Company is the claimant,
the courts of the State of California located in the City and
County of San Francisco or in the United States District Court for
the Northern District of California, which courts shall have
exclusive jurisdiction over the adjudication of such matters, and
the Company and (212) consent to the jurisdiction of such courts
and personal service with respect thereto. The Company hereby
consents to personal jurisdiction, service and venue in any court
in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against (212) or any
indemnified party. Each of (212) and the Company waives all right
to trial by jury in any Proceeding or counterclaim (whether based
upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. Each of (212) and the Company agrees
that a final judgment in any such Proceeding or counterclaim
brought in any such court shall be conclusive and binding upon
(212) and the Company and may be enforced in any other courts to
the jurisdiction of which (212) or the Company is or may be
subject, by suit upon such judgment. The Company hereby appoints,
without power of revocation, Xxxxxx Xxxxx, Chief Executive Officer
of the Company, or any designee, to accept and acknowledge on its
behalf service of any and all process, which may be served in any
Proceeding arising out of or relating to this Agreement.
17. This Agreement shall be binding upon the Company and (212) and
their respective successors and assigns and any successor or
assign of any substantial portion of the Company's and (212)'s
respective businesses and/or assets.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance hereof in the space provided below, whereupon this
Agreement and your acceptance shall constitute a binding agreement between
us.
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
(212) VENTURES, INC. SOFTNET SYSTEMS, INC.
By: By:
__________________________________ ________________________________
Name: Xxxxxx X. Xxxxx
Title: Chairman and CEO
