BELGRAVIA INVESTMENT PARTNERS LLC
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
June 11, 2003
PRIVATE AND CONFIDENTIAL
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PerfectData Corporation
000 Xxxx Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Dear Xx. Xxxxxxx:
This is to confirm our Agreement (the "Agreement") between Belgravia
Investment Partners LLC or its designee ("Belgravia") and PerfectData
Corporation, a California corporation ("PerfectData"). You have agreed that
Xxxxxxxxx has acted as a finder and introducing party with respect to the
prospective merger, consolidation or other business combination between Supercom
Ltd. and PerfectData (the "Merger Transaction"). Supercom Ltd. and PerfectData
have entered into a letter of intent dated April 30, 2003 (the "Letter of
Intent") with respect to the Merger Transaction. As used in this Agreement,
PerfectData shall include, if applicable, any entity owned or controlled by, or
affiliated with, PerfectData.
1. As compensation for the services provided by Belgravia in connection
with the Merger Transaction, upon consummation of the Merger Transaction,
Belgravia (or its designees) shall be issued warrants (the "Warrants") to
purchase such number of shares of Common Stock of PerfectData or any other
entity resulting from the Merger Transaction (the "Warrant Shares") equal to one
percent (1.0%) of the issued and outstanding shares of Common Stock of
PerfectData, or any other entity resulting from the Merger Transaction (on a
fully-diluted basis), after giving effect to the consummation of the Merger
Transaction (the "Transaction Fee"); provided, however, if the net cash (as such
net cash amount is calculated for purposes of the definitive merger agreement)
of PerfectData at the closing of the Merger Transaction is less than $2,000,000
(or such lesser amount as provided in the second proviso of Section 5(b) of the
Letter of Intent), then the Transaction Fee shall be reduced to an amount equal
to 1.0% multiplied by a fraction, the numerator of which is the net cash at
Closing and the denominator of which shall be $2,000,000 (or such lesser amount
as provided in the second proviso of Section 5(b) of the Letter of Intent). The
Warrants shall be exercisable for a five-year period at an exercise price of
$.01 per share. The Warrants shall provide for "piggyback"
registration rights with respect to the Warrant Shares as well as any other
registration rights which are granted to the officers, directors and
stockholders of Supercom Ltd. (the "Insiders") with respect to shares of Common
Stock received by the Insiders in the Merger Transaction. The Warrants and
Warrant Shares shall be subject to the same lock-up agreement as the directors
and executive officers of PerfectData (not including Xxxxx Xxxxxxxxxx).
2. PerfectData agrees to the indemnification provisions attached hereto as
Annex A (the "Indemnity Provisions"), which provisions are incorporated herein
in their entirety and shall survive the termination of this Agreement. Other
than as set forth in the Indemnity Provisions, nothing in this Agreement is
intended to confer upon any other person (including stockholders, employees or
creditors of PerfectData) any rights or remedies hereunder or related hereto.
PerfectData also agrees that Belgravia shall not have any liability (including
without limitation, liability for any losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses or disbursements) in
contract, tort or otherwise to PerfectData, or to any person claiming through
PerfectData, in connection with the engagement of Belgravia pursuant to this
Agreement and the matters contemplated hereby, except to the extent any such
liability is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted primarily and directly from the
gross negligence or willful misconduct of Belgravia.
3. This Agreement embodies the entire agreement and understanding between
the parties hereto and supersedes any and all negotiations, prior discussions
and preliminary and prior agreements and understandings related to the subject
matter hereof, and may be modified only by a written instrument duly executed by
each party. This Agreement has been duly authorized, executed and delivered by
and on behalf of each of PerfectData and Belgravia.
4. The validity and interpretation of this Agreement will be governed by,
and construed and enforced in accordance with, the laws of the State of New
York. New York law shall also govern any claims asserted in any suit, action or
proceeding arising out of or relating to this Agreement or the Indemnity
Provisions.
Please confirm that the foregoing correctly sets forth your understanding
by signing and returning to us the enclosed duplicate copy of this letter.
Sincerely,
BELGRAVIA INVESTMENT PARTNERS LLC
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Principal
ACCEPTED AND AGREED TO:
PERFECTDATA CORPORATION
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: President
Date: June 11, 2003
