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Exhibit 10.9
Dated as of September 21, 1999
Bitwise Designs, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxx
Chief Executive Officer
Dear Xx. Xxxxx:
This Agreement, when executed by the parties hereto, will constitute an
agreement between Bitwise Designs, Inc. ("Bitwise") and Corporate Funding Group,
LLC ("Corporate Funding") pursuant to which Bitwise agrees to retain Corporate
Funding and Corporate Funding agrees to be retained by Bitwise under the terms
and conditions set forth below.
1. Bitwise hereby retains Corporate Funding to perform financial
consulting services related to the corporate finance and other financial service
matters of Bitwise. In this regard, subject to the terms set forth below,
Corporate Funding shall furnish to Bitwise (i) furnish advice and
recommendations with respect to such aspects of the business and affairs of
Bitwise as Bitwise shall, from time to time, reasonably request upon reasonable
notice; and (ii) assume responsibility for consenting, or withholding the
consent for, as market conditions warrant, the sale by certain security holders
and certain Bitwise officers of Bitwise securities, pursuant to private offering
subscription documents of even date. Nothing herein shall require Bitwise to
utilize Corporate Funding's services in any particular transactions.
2. Bitwise hereby grants Corporate Funding an irrevocable preferential
right for a period of three years from the date hereof to purchase for its
account or the accounts of its affiliates, agents, or associates, any securities
of Bitwise which Bitwise may seek to privately sell in an offering exempt from
the registration requirements of the Securities Act of 1933, as amended, up to
an aggregate of $5,000,000. Bitwise will consult Corporate Funding with regard
to any such offering and will offer Corporate Funding the opportunity to
purchase such securities on terms not more favorable to Bitwise, than it can
secure elsewhere. If Corporate Funding fails to accept such offer within 10
business days after the mailing of a notice containing such offer by registered
mail addressed to Corporate Funding, then Corporate Funding shall have no
further claim or right with respect to the financing proposal contained in such
notice. If, however, the terms of such proposal are subsequently modified in any
material respect, the preferential right referred to herein shall apply to such
modified proposal as if the original proposal had not been made. Corporate
Funding's
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failure to exercise its preferential right with respect to any particular
proposal shall not affect its preferential rights relative to future proposals.
3. As compensation for the services outlined in paragraph one above,
Bitwise shall sell to Corporate Funding (or its designated affiliates) 20,000
Series B Common Stock Purchase Warrants (the "Warrants"), at a price of $.001
per warrant.
4. (i) Bitwise and Corporate Funding further acknowledge and agree that
Corporate Funding may act as a finder, investment banker or financial consultant
in various Strategic Transactions (defined below as a Merger or Sale) in which
the Company may be involved. The Company hereby agrees that in the event a
Strategic Transaction, other than Financing, is consummated, Bitwise shall pay
to Corporate Funding a fee (the "Transaction Fee") equal to the aggregate of
five percent of the amount of the consideration paid in such transaction up to
$2 million of consideration, four percent of the amount of such consideration
above $2,000,000 up to $4 million, three percent of the amount of such
consideration above $4,000,000 up to $6 million, two percent of the amount of
such consideration amount above $6,000,000 up to $8 million, and one percent of
the amount of such consideration over $ 8 million. The Transaction Fee shall be
paid in cash at the closing of the transaction to which it relates, and shall be
payable whether or not the transaction involves stock, or a combination of stock
and cash, or is made on the installment sale basis. In addition, if Bitwise
shall, within 12 months immediately following the termination of this Agreement,
consummate a transaction with any party introduced by Corporate Funding to
Bitwise and with which Bitwise was engaged in substantial negotiations for a
Strategic Transaction prior to such termination, Bitwise shall pay to Corporate
Funding a Transaction Fee with respect to such transaction calculated in
accordance with this paragraph.
(ii) For purposes hereof, "Consideration" shall mean the value of
all cash, securities and other property or other assets paid, received, payable
or receivable, including debt assumed, in connection with a Strategic
Transaction, including, without limitation: (a) any distributions made to
shareholders in anticipation of the closing; (b) any employment contract
enhancements or non-competition payments (other than ordinary and customary
compensation in connection with bona fide employment agreements); (c) any
payments in connection with any separate transactions affecting another business
entity or any of its assets or securities (e.g., purchase or lease of any real
estate or other assets, but in the case of a lease, Consideration shall include
only sums in excess of current rentals paid to unrelated or unaffiliated third
parties); (d) any indebtedness for money borrowed, including receivables,
pension liabilities and guarantees, which are assumed; and (e) other business
considerations (e.g. business discounts and/or credits for services and/or
products). For purposes of determining Consideration, the value of any
securities (whether debt or equity) shall be deemed to be the greater of: (i)
the fair market value thereof as of the day the definitive agreement is executed
by all parties; or (ii) the average of the last reported sales prices of the
securities on the twenty (20) consecutive business days prior to the
consummation of the Strategic Transaction as reported on the principal exchange
on which the security is listed, or, as the case may be, the NASDAQ National
Market System; provided that the value of securities that are not freely
tradable or have no established public market shall be the fair market value
thereof as
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reasonably agreed-upon by the parties hereto. If any part of the Consideration
shall be deferred or contingent upon future earnings or other contingencies,
then Corporate Funding shall be entitled to a Transaction Fee on such additional
Consideration, and the term Consideration shall include such additional
compensation which shall be payable on the basis of the payment when made by the
payor. The Transaction Fee for such Consideration paid or received in the future
shall be payable when such Consideration is paid and shall be calculated using
the formula set forth in Section 4(i) by adding this subsequent Consideration to
all other Consideration previously paid.
(iii) For the purposes of this paragraph 4: (a) a "Merger" shall
mean an acquisition, combination, joint venture or other like transaction with
another entity; and (b) a "Sale" shall mean the sale of all or a material
portion of the assets of the company.
5. All obligations of Corporate Funding contained herein shall be
subject to reasonable notice. Corporate Funding shall devote such time and
effort to the performance of its duties hereunder as Corporate Funding shall
determine is reasonably necessary for such performance. Corporate Funding may
look to such others for such factual information, investment recommendations,
economic advice and/or research, upon which to base its advice to Bitwise
hereunder, as it shall deem appropriate. Bitwise shall furnish to Corporate
Funding all information reasonably relevant to the performance by Corporate
Funding of its obligations under this Agreement, or particular projects as to
which Corporate Funding is acting as advisor, which will permit Corporate
Funding to know all facts material to the advice to be rendered, and all
material or information reasonably requested by Corporate Funding. In the event
that Bitwise fails or refuses to furnish any such material or information
reasonably requested by Corporate Funding, and thus prevents or impedes
Corporate Funding's performance hereunder, any inability of Corporate Funding to
perform shall not be a breach of its obligations hereunder. Nothing contained in
this Agreement shall limit or restrict the right of Corporate Funding or of any
partner, employee, agent or representatives of Corporate Funding, to be a
partner, director, officer, employee, agent or representative of, or to engage
in, any other business, whether of a similar nature or not, nor to limit or
restrict the right of Corporate Funding to render services of any kind to any
other corporation, firm, individual or association.
6. Corporate Funding shall hold in confidence any confidential
information, which Bitwise provided to Corporate Funding pursuant to this
Agreement unless Bitwise gives Corporate Funding permission to in writing to
disclose such confidential information to a specific third party.
Notwithstanding the foregoing, Corporate Funding shall not be required to
maintain confidentiality with the respect to information (i) which is or becomes
part of the public domain; (ii) of which it had independent knowledge prior to
disclosure; (iii) which comes into the possession of Corporate Funding in the
normal routine course of its own business from and through independent non-
confidential sources; or (iv) which is required to be disclosed by Corporate
Funding by governmental requirements. If Corporate Funding is requested or
required (by oral questions, interrogatories, requests for information or
document subpoenas, civil investigative demands, or similar process) to disclose
any confidential information supplied to it by Bitwise, Corporate Funding shall,
unless prohibited by law, promptly notify Bitwise of such request(s) so that
Bitwise
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may seek an appropriate protective order.
7. Each party agrees to indemnify and hold harmless the other, their
employees, agents, representatives and controlling persons (and the officers,
directors, employees, agents, representatives and controlling persons of each of
them) from and against any and all losses, claims, damages, liabilities, cost
and expenses (and all actions, suits, proceeding or claims in respect thereof)
and any legal or other expenses in giving testimony or furnishing documents in
response to a subpoena or otherwise, as and when incurred, directly or
indirectly, caused by, relating to, based upon or arising out of the services
pursuant to this Agreement. Bitwise further agrees that Corporate Funding shall
incur no liability to Bitwise or any other party on account of this Agreement or
any acts or omissions arising out of or related to the actions of Corporate
Funding relating to this Agreement or the performance or failure to perform any
services under this Agreement except for Corporate Funding's intentional or
willful misconduct. This paragraph shall survive the termination of this
Agreement.
8. This Agreement may not be transferred, assigned or delegated by any
of the parties hereto without the prior written consent of the other party
hereto.
9. The failure or neglect of the parties hereto to insist in any one or
more instances, upon the strict performance of any of the terms and conditions
of this Agreement, or their waiver of strict performance of any of the terms and
conditions of this agreement, shall be construed as a waiver of strict
performance of any of the terms or conditions of this Agreement, shall not be
construed as a waiver or relinquishment in the future of such term and
condition, but the same shall continue in full force and effect.
10. The term of this Agreement is for 36 months. This agreement may be
terminated by Bitwise in the event that Xxxxx Xxxxxx ceases to be principal
executive officer of Corporate Funding.
11. Any notices hereunder shall be sent to Bitwise and Corporate
Funding at their respective addresses set forth above. Any notice shall be given
by registered or certified mail, postage prepaid, and shall be deemed to have
been given when deposited in the United States mail. Either party may designate
any other address to which notice shall be given, by giving written notice to
the other of such change of address in the matter herein provided.
12. This Agreement has been made in the State of New York and shall be
construed and governed in accordance with the laws thereof without giving effect
to principles governing conflicts of law.
13. This Agreement contains the entire agreement between the parties,
may not be altered or modified, except in writing, signed by the party to be
changed thereby, and supersedes any and all previous agreements between the
parties relating to the subject or matter hereof.
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14. This Agreement shall be binding upon the parties hereto, the
indemnified parties and their respective heirs, administrators, successors and
permitted assigns.
If you are in agreement with the foregoing, please execute two copies
of this letter in the space provided below and return them to the undersigned.
Very truly yours,
CORPORATE FUNDING
GROUP, LLC
By: GATEWAY NETWORK, LLC
(Manager Member)
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
Title: Manager/Member
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN
BITWISE DESIGNS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President
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