EXHIBIT 10.30
LETTER OF APPOINTMENT
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August 24, 1999
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Dear ▇▇▇▇:
This Letter of Appointment ("Agreement") confirms our conversations with
you. This Agreement appoints ▇▇▇▇▇ Investment Group, Inc. ("▇▇▇▇▇ Group") as
financial advisor to provide financial management support to. ▇▇▇▇▇▇▇▇▇.▇▇▇, or
any affiliated or successor business entities ("▇▇▇▇▇▇▇▇▇.▇▇▇" or the
"Company").
BACKGROUND
▇▇▇▇▇▇▇▇▇.▇▇▇ is a leading digital imaging, sharing and e-commerce
community. The business model was adopted in June of 1998, and the site was
officially launched in February of 1999. At tile same time, the predecessor
company entered into a reorganization with Data Growth, Inc., which was
subsequently renamed ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Today, ▇▇▇▇▇▇▇▇▇.▇▇▇ is building its user base and developing its advertising
and e-commerce business based on this user base.
SCOPE
▇▇▇▇▇ Group is being engaged by ▇▇▇▇▇▇▇▇▇.▇▇▇ to provide on a contract
outsource basis part-time financial management support. This includes assisting
with financial statement preparation, reporting, analysis, strategy preparation,
presentation and strengthening financial controls.
The financial management support to be performed by ▇▇▇▇▇ Group will be
divided into the following stages:
Stage 1: Assessment. ▇▇▇▇▇ Group will perform a review of
▇▇▇▇▇▇▇▇▇.▇▇▇'s existing financial operations in light of the operational focus
and long term goals of the Company. This will include but not limited to
meeting with ▇▇▇▇▇▇▇▇▇.▇▇▇.
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management and reviewing relevant financial information, documents and materials
relating to ▇▇▇▇▇▇▇▇▇.▇▇▇ and to the industry of which ▇▇▇▇▇▇▇▇▇.▇▇▇ is a part.
Stage II. Implementing Financial Strategy. Upon completion of the
Assessment, ▇▇▇▇▇ Group, working with ▇▇▇▇▇▇▇▇▇.▇▇▇, will work to strength
financial statement preparation, financial reporting and financial analysis. It
will work with ▇▇▇▇▇▇▇▇▇.▇▇▇ to strength financial systems and controls. In
addition, ▇▇▇▇▇ Group will work with ▇▇▇▇▇▇▇▇▇.▇▇▇ management on preparing a
more detailed financial strategy. This will include strengthening the annual
financial budgeting process as well as the longer term financial strategy of the
Company.
A precise timetable for the completion of Stages I and II is difficult to
forecast because many elements necessary to make such a forecast are not within
the control of ▇▇▇▇▇ Group. However, ▇▇▇▇▇ Group estimates that Stage I will
take approximately one to two months to complete, depending on the availability
of information and resolution of various issues. In addition, ▇▇▇▇▇ Group
estimates that Stage II should take approximately one to two months to
implement. Stage II may begin prior to the completion of Stage I. During Stage
I, ▇▇▇▇▇ Group shall not be obligated to devote more than 80 hours per month to
its obligation under this Agreement. During the first month following the
completion of Stage I, ▇▇▇▇▇ Group shall not be obligated to devote more than 60
hours per month to its obligations hereunder. During the second month after the
completion of Stage I, ▇▇▇▇▇ Group shall not be obligated to devote more than 40
hours per month to its obligations hereunder. Thereafter, ▇▇▇▇▇ Group shall not
be obligated to devote more than 20 hours per month to its obligations
hereunder.
After the initial six months, ▇▇▇▇▇ Group will continue to provide
part-time (not more than 20 hours per month) financial management support on an
ongoing basis to support the growth of ▇▇▇▇▇▇▇▇▇.▇▇▇ and continue the
development of a stronger and more effective financial infrastructure at
▇▇▇▇▇▇▇▇▇.▇▇▇ during the term of this Assignment.
COMPENSATION FOR FINANCIAL, MANAGEMENT SUPPORT FOR ▇▇▇▇▇▇▇▇▇.▇▇▇
As compensation for the services of ▇▇▇▇▇ Group, ▇▇▇▇▇▇▇▇▇.▇▇▇ will pay, or
cause to be paid, the following fees to ▇▇▇▇▇ Group:
1. RETAINER: ▇▇▇▇▇▇▇▇▇.▇▇▇ will pay ▇▇▇▇▇ Group a retainer of $5,000
per month. In addition, the retainer to ▇▇▇▇▇ Group each month will
include 10,000 unrestricted shares of ▇▇▇▇▇▇▇▇▇.▇▇▇, or the
equivalent amount adjusted for any stock split, free and clear of
any liens or other claims. The number of shares in any month, will
further be increased by any amount necessary to adjust the value of
the shares should the average daily closing price per share fall
below a $2.50 closing price during the preceding month. The monthly
Retainer Fee will be due at the beginning of each month and will
continue until the completion of this agreement. The first payment
will be due upon the signing of this Agreement. Such Retainer Fee
shall be deemed earned when due.
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2. EXPENSES: Upon execution of this Agreement, ▇▇▇▇▇ Group will be
reimbursed promptly upon submission for all documented out-of-pocket
expenses incurred for this engagement. Individual expenses in
excess of $1,000 will be reviewed with you in advance. Fees
required by financial institutions and investors and charges by
auditors, legal counsel or other advisers engaged by ▇▇▇▇▇▇▇▇▇.▇▇▇
are not included in the fees of ▇▇▇▇▇ Group. ▇▇▇▇▇▇▇▇▇.▇▇▇ will
send ▇▇▇▇▇ Group an initial deposit of $2,500 against expenses. Any
amount not required to meet reimbursement claims will be returned to
▇▇▇▇▇▇▇▇▇.▇▇▇ by ▇▇▇▇▇ Group.
▇▇▇▇▇▇▇▇▇.▇▇▇ will pay 2:0% monthly interest on all monies which have not
been paid within 30 days of the date of bills from ▇▇▇▇▇ Group and will be
responsible for any legal fees incurred by ▇▇▇▇▇ Group in collecting any
moneys owed to it under this Agreement.
▇▇▇▇▇ Group will have the right, at its sole discretion, to advertise its
role under this Agreement.
EXCLUSIVITY AND TERMINATION
▇▇▇▇▇ Group is appointed to provide financial management support for
▇▇▇▇▇▇▇▇▇.▇▇▇ for a period of 6 months commencing from the date hereof. Upon
completion of this term, this Agreement may be terminated at any time
thereafter, upon the expiration of thirty days written notice of termination.
Upon termination, ▇▇▇▇▇ Group shall be entitled to receive all compensation
accrued to the date of termination.
INSURANCE
▇▇▇▇▇▇▇▇▇.▇▇▇ agrees to obtain and maintain during the term of this
Agreement and for any period thereafter during which it retains any indemnity
obligation hereunder, insurance of the type and in the amount necessary to cover
any and all indemnity obligations of ▇▇▇▇▇▇▇▇▇.▇▇▇ to ▇▇▇▇▇ Group, its
directors, officer, employees, agents and counsel.
INDEMNITY
The attached indemnity is included herein by reference and is specifically
made part of this Agreement.
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To acknowledge acceptance of the terms of this Agreement, please sign it
and return a copy to us. We look forward to the opportunity of working with you
and your colleagues.
With best wishes, we remain
Sincerely yours,
▇▇▇▇▇ INVESTMENT GROUP, INC.
▇▇▇▇ ▇▇▇▇▇▇
Principal
AGREED AND ACCEPTED BY ▇▇▇▇▇▇▇▇▇.▇▇▇:
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Name
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Date
Enclosure
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Attachment
INDEMNITY
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▇▇▇▇▇▇▇▇▇.▇▇▇ HEREBY AGREES:
(a) to indemnify and hold harmless ▇▇▇▇▇ Group and ▇▇▇▇▇ Group shareholders,
directors, officers, employees, agents and counsel (▇▇▇▇▇ Group and each
such other person being hereinafter referred to as an "Indemnified
Person") from and against any loss, damage, liability, claim or expense
(including attorney's fees) suffered or incurred by, or asserted
against, an Indemnified Person (including any amounts paid in settlement
of any action, suit, proceeding or claim brought or threatened to be
brought under the Federal or state securities laws, at common law or
otherwise) which arises in connection with or is based upon any actual
or proposed step or element of the engagement defined in the letter
Agreement to which this is attached (the "Transaction"); and
(b) to reimburse each Indemnified Person promptly for- any travel, legal or
other out-of-pocket expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any action, suit,
proceeding or claim ("Litigation") for which indemnification under the
preceding clause (a) may be sought (including the fees and disbursements
of counsel of such Indemnified Person's choice retained in connection
with investigation or defending against any Litigation);
provided however, there shall be excluded from such indemnification and
reimbursement any such loss, damage, liability, claim or expense which arises
primarily out of or is based primarily upon any action or, failure to act by
▇▇▇▇▇ Group (other than an action or failure to act undertaken at the request or
with the consent of the Company) which is held, by a final determination in the
Litigation giving rise to any such loss, damage, liability or claim suffered or
incurred by an Indemnified Person, to constitute gross negligence or willful
misconduct by ▇▇▇▇▇ Group.
The foregoing indemnity and reimbursement agreement shall be in addition to
any other rights which any Indemnified Person may have at common law or
otherwise.
The rights to indemnification and reimbursement provided for in this
Section shall apply whether or not an Indemnified Person is named or threatened
to be named as a party in any action, suit, proceeding or claim brought or
threatened to be brought in respect of which such rights would apply had such
Indemnified Person been so named and/or shall survive any termination of the
engagement of ▇▇▇▇▇ Group hereunder or the consummation or abandonment of any
effort associated with the Transaction.
In addition, in any legal action, arbitration, or other proceeding brought to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to
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reasonable attorney's fees and any other costs incurred in that proceeding in
addition to any other relief to which it is entitled.
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AMENDMENT TO LETTER OF APPOINTMENT
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December 1, 1999
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Suite 142
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Dear ▇▇▇▇:
This Letter ("Amendment") amends the November 29,1999 Letter of Appointment
("Agreement") between ▇▇▇▇▇ Investment Group, Inc. ("▇▇▇▇▇ Group") and
▇▇▇▇▇▇▇▇▇.▇▇▇ or any affiliated business entities ("PhotoLoft"). Unless
specifically amended by this Amendment, the terms of the November 29, 1999
Agreement will remain unchanged.
The Section on SCOPE will be modified as follows:
In addition to assisting with financial statement preparation, reporting,
analysis, strategy preparation, presentation and strengthening financial
controls, during the period from November 29, 1999 through December of 1999,
▇▇▇▇▇ Group will provide bookkeeping services. These bookkeeping services will
include handling payable processing, payroll processing as well as preparing a
cash forecast.
The Section on COMPENSATION FOR FINANCIAL MANAGEMENT SUPPORT FOR ▇▇▇▇▇▇▇▇▇.▇▇▇,
point 1, Retainer, will be amended as follows:
1. RETAINER: The following terms:
▇▇▇▇▇▇▇▇▇.▇▇▇ will pay ▇▇▇▇▇ Group a retainer of $5,000 per month.
In addition, the retainer to ▇▇▇▇▇ Group each month will include
10,000 unrestricted shares of ▇▇▇▇▇▇▇▇▇.▇▇▇, or the equivalent
amount adjusted for any stock split, free and clear of any liens or
other claims. The number of shares in any month, will further be
increased by any amount necessary to adjust the value of the shares
should the average daily closing price per share fall below a $2.50
closing price during the preceding month.
Are changed to:
▇▇▇▇▇▇▇▇▇.▇▇▇ will pay ▇▇▇▇▇ Group a cash retainer of $5,000 per
month. For the first month, the cash retainer will be $15,000. In
addition, ▇▇▇▇▇ Group is granted options as of November 1, 1999 to
acquire 500,000
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shares of PhotoLoft at an exercise price of 85% of the $1.1875
PhotoLoft stock price on November 1, 1999 ("Options"). These Options
will be fully vested as of the date of the grant. These options will
be exercisable for a period of up to seven years from the date of
issuance. They shall be subject to no restrictions on exercise. If
during the period of the Agreement, an investment is made in
PhotoLoft which would convert into a lower stock price (adjusted for
any warrants issued to these investors as consideration for the
investment), PhotoLoft will cancel and replace these Options with a
grant of new options at an exercise price of 85% of the lower stock
price (reflecting the dilution by the warrants). These options will
also be fully vested as of the date of issuance. These options will
be consistent with and take account for any dilution as a result
of the issuance of the new stock. If options are issued to other
parties at a lower exercise price, then PhotoLoft will cancel and
replace these Options with new options with the same exercise price
as the other options issued to the other parties. These options will
be fully vested on date of issuance. These options will be
consistent with and take account for any dilution as a result of the
issuance of the new options to the other parties. There shall be no
other restrictions on these options. These Options shall be provided
to ▇▇▇▇▇ Group within 15 days of the signing of this Amendment. Such
Retainer Fee shall be deemed earned upon the signing of this
Amendment.
To acknowledge acceptance of the terms of this Amendment to the Agreement,
please sign it and return a copy to us. We look forward to the opportunity of
working with you and your colleagues. With best wishes, we remain, sincerely
yours,
▇▇▇▇▇ INVESTMENT GROUP, INC.
▇▇▇▇ ▇▇▇▇▇▇
Principal
AGREED AND ACCEPTED BY ▇▇▇▇▇▇▇▇▇.▇▇▇:
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