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EXHIBIT 10.7
PACIFIC SOFTWORKS INC.
000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
January 27, 1999
Xx. Xxxxx Xxxxxxxxx
Xxxxxxxxx & Co.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xx. 00000
Dear Xxxxx,
This letter is to document the terms of the services performed and to be
performed on a nonexclusive basis by Golenberg & Co. for the benefit of Pacific
Softworks. Pursuant to a letter between Pacific Softworks Inc., (the "Company")
on the one hand, and Golenberg & Co. and Xxxx Xxxxx (collectively
"Golenberg"), on the other hand dated June 18, 1998 (the "Letter"). Golenberg
has previously provided certain services to Pacific Softworks. Pacific
Softworks has paid Golenberg $30,000. These payments are hereby accepted by
Golenberg as payment in full for the cash obligations due under the Letter. In
addition, the Letter between the parties provides that Golenberg would receive
options on 10% of Pacific Softworks' stock with a strike price based on a
$4,000,000 Company value as of June 18, 1998.
This agreement is to clarify and supersede the prior Letter as provided herein
as it relates to the options. If, at any time prior to June 18, 1999, Golenberg
procures and presents to Pacific Softworks a purchaser or financing offer(s)
for Pacific Softworks, subject to costs, terms, and conditions reasonable and
customary in such a proposal, which offer is acceptable by Pacific Softworks,
then Pacific Softworks will thereupon issue to Golenberg as compensation for
such services a five year option to purchase shares of Company stock in Pacific
Softworks that represents 10% of the outstanding shares of the Company as of
June 18, 1998, with a strike price based on a total Company value of
$4,000,000. Except for the $30,000 previously paid by Pacific Softworks to
Golenberg, or as to out-of-pocket expenses incurred by Golenberg and approved
by Pacific Softworks, each party will pay their own costs incurred in connection
with any purchaser or financing transactions, and neither party shall be
responsible for the other party's costs.
Except as otherwise mutually agreed upon in the future, if Golenberg does not
produce a purchaser or financing offer as set forth above, then Golenberg shall
be entitled to retain as sole compensation the $30,000 previously paid by
Pacific Softworks to Golenberg and nothing more.
This agreement supersedes any and all previous understanding and/or agreements,
whether written or verbal, and shall not be modified or changed except in
writing executed by both parties. It shall bind, obligate and inure to the
benefit of the legal successors, transferees, grantees and heirs of each party
hereto. Except as set forth in this agreement, both parties agree to release the
other from any obligation from previous transactions, understandings, or
agreements (including but not
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January 27, 1999
limited to the Letter) and from any and all other claims or liabilities, whether
known or unknown, against the other (including against Xxxx X. Xxxxx).
The parties further agree that any disputes under or relating to this
agreement, or performance or nonperformance hereunder, shall exclusively be
subject to arbitration pursuant to the Commercial Arbitration Rules of the
American Arbitration Association, that the arbitrator shall grant to the
prevailing party any and all attorneys' fees and costs and expenses, as well as
interest, and that the award shall be enforceable in the courts.
Each party agrees that in any dispute regarding the interpretation or
construction of this agreement, no presumption shall operate in favor of or
against any party by virtue of its or his role in drafting or not drafting the
terms and conditions set forth herein.
Sincerely,
/s/ XXXXX XXXXXXX 03/02/99
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Xxxxx Xxxxxxx
Accepted on 3-2-99 by:
/s/ XXXXX XXXXXXXXX
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Golenberg & Co.
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[GOLENBERG & CO. LETTERHEAD]
VIA TELEFAX: (000) 000-0000
June 18, 1998
Mr. Xxxxx Xxxxxxx
Pacific Softworks
000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Dear Xxxxx,
Just a note to thank you for the time you spent with Xxxx Xxxxx and me last
week. We enjoyed our visit very much, and believe that there are some distinct
opportunities for Pacific Softworks. In that regard, we believe that the
company must undertake a thorough examination of its current business, as well
as strategic direction in the future. This will encompass creating a well
thought out business plan and model. Once the model is complete, we will need
to examine and evaluate the various options available to achieve these plans.
This will include developing a comprehensive financing plan, or exit strategy,
which is in the best interest of the current Pacific Softworks shareholders. On
our visit, we spent a good amount of time describing to you the actual process,
and assuring you that it will take considerable amounts of time and focus.
Because we wish to align ourselves with your interest, we have structured our
fee arrangement consistent with creating value on your behalf. In that regard,
we would require an option on 10 percent of the currently outstanding, fully
diluted shares. This includes all options and warrants outstanding. This option
would have an exercise price which would value the company at $4,000,000. For
example, if the company had one million shares outstanding, and had a value of
$4.00 per share, we would get options granted to us for 100,000 shares at $4.00
per share. This requires our assignment to create values far in excess of
$4,000,000, to make our efforts at all worthwhile.
In addition, for our time spent, and to help defray our overhead costs, we
would require a $10,000 per month retainer for a three-month period. Once the
business plan and evaluation are complete, and we have agreed upon a financing
plan, we would be involved as your Financial Advisor, in whatever capacity was
deemed appropriate. This would largely depend on the nature of the transaction
as to whether the company needed to raise money, or was looking to a joint
venture partner. These activities might include additional fees, but would be
agreed upon at the time such activities took place.
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It's important for you to understand that, at all times, you will be in control
of the process. We will have input and suggestions, but are keenly aware that
this is your company.
We look forward to a long and profitable relationship, and feel quite confident
that, after we know all the facts, we can create significant value.
Very truly yours,
/s/ XXXXX XXXXXXXXX
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Xxxxx Xxxxxxxxx
GG:gc
cc: Xxxx Xxxxx
Our assignment will include reimbursement of all out-of-packet expenses to be
reasonably approved by you. We will begin the cash portion of our arrangement
July 1, 1998 and the option portion will begin effective as the date of the
signing.
/s/ XXXXX XXXXXXX 06-22-98
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Xxxxx Xxxxxxx
Approved
