February 23, 2005
Exhibit
10.32
February
23, 2005
Smart
Online, Inc
0000
Xxxxxxxx Xxxxxxx
Durham,
North Carolina 27713
Attention:
Xxxxxxx Xxxxx
Re: Investment
Banking Services
Dear
Xxxxxxx:
This
letter agreement (this "Agreement") will confirm our understanding relating
to
the engagement of Berkley Financial Services (BFS) Ltd. ("we", or "us") as
a
financial advisor to Smart Online. Inc. (the "Company" or "you"). Capitalized
terms used in this Agreement have the meanings set forth at Section 11. In
consideration of the following mutual covenants, and intending to be legally
bound. Berkley Financial Services (BFS) Ltd. and the Company agree as follows:
1.
Appointment. (a) The Company appoints Berkley Financial Services (BFS) Ltd.
its
non-exclusive agent to represent the Company in connection with the negotiation
and closing of one or more Transactions with investors outside the United
States.
(b)
In
the performance of our services under this Agreement, both Berkley Financial
Services (BFS) Ltd. and our employees and representatives will be independent
contractors. This Agreement does not give Berkley Financial Services (BFS)
Ltd.
or any of our employees or representatives any authority to bind the Company
to
any contractual arrangement. You will retain the sole discretion regarding
any
decision to proceed with any Transaction.
2.
Services. (a) We will perform those financial advisory services that we deem
necessary or appropriate for the closing of the Transaction, including (if
analyzing historical and proforma financial information pertaining to your
business and operations; (ii) assisting in performing due diligence relating
to
the Transaction (although you are responsible for completing any due diligence
to your satisfaction); (iii) reviewing and commenting on financial projections
prepared by you; (iv) preparation or review of presentation and placement
documents; (v) review of documents required for the structuring. negotiation,
and documentation of the Transaction; (vi) using our best efforts to identify
and contact potential investors for the Transaction; (vii) using our best
efforts to identify and contact potential acquirers of, investors in. or
strategic partners or acquisition candidates for, the Company; (viii) advising
and assisting you in the negotiation and structuring of a Transaction; and
(ix)
assisting in closing a Transaction, except that we will not perform any services
that would require us or our employees to be licensed or registered as a
broker-dealer or investment advisor.
(b)
None
of our services will be deemed to constitute legal representation, auditing,
or
tax services, and you agree that the Company will consult appropriately licensed
attorneys or certified public accountants, respectively, on all material
legal,
auditing, and tax matters involving the Company.
(c)
Our
services will be performed by our employees or by other persons engaged and
paid
by us. We reserve the right to determine and change the personnel assigned
to
this engagement at any time, with the Company's consent; such consent not
to be
unreasonably withheld.
(d)
Our
services will generally be performed at our offices, although we expect to
meet
with your officers, directors, employees, auditors, and legal counsel at
their
respective offices and to provide other services at your offices or other
locations from time to time.
3.
Company Obligations. (a) For us to assist you with any Transaction and to
render
financial advisory services, you will promptly provide us with information
that
we request, allow us access to the Company's officers, directors, employees,
auditors, legal counsel, and other consultants and advisors, and take any
other
commercially reasonable actions that we request.
(b)
In
preparing or reviewing any documentation to be delivered to any third party
in
connection with any Transaction, the Company is responsible for ensuring
that
any disclosures are true, correct, and complete in all material respects,
and we
assume no responsibility for the completeness or accuracy of any information
prepared or reviewed by you.
4.
Advisory Fees. (a) You will pay us a contingent fee in connection with each
Transaction in an amount in cash from Three Percent (3%) to Ten Percent (10%)
of
the Aggregate Proceeds from the Transaction with any person or entity from
the
Approved Investor List. The amount payable for each Transaction will be agreed
by you and us at the time of the Transaction. In calculating the fee under
this
Section, any Aggregate Proceeds in a form other than cash will be valued
at
their fair marker value.
(b)
The
Transaction Fee will apply to any Transaction occurring prior to termination
of
this Agreement.
5.
Confidentiality. We will maintain the confidentiality of your Confidential
Information during the term of this Agreement and for a period of one year
thereafter. We may disclose Confidential Information to our employees and
representatives as necessary to provide thee services, provided that they
have
agreed to protect your Confidential Information in accordance with this
Agreement.
February
23, 2005
Page
2
6.
Liability, Indemnification, and Contribution. (a) No Indemnitee will be liable
to you for any Liability for any acts or omissions that are taken or omitted
in
connection with the performance of this Agreement, except as provided below.
(b)
You
must indemnify each Indemnitee from and against all Liabilities arising out
of
or relating to our services. You will also indemnify each Indemnitee for
all
costs and expenses (including fees of counsel selected by the Indemnitee)
incurred in defending any claim for which the Indemnitee is entitled to
indemnification. You must advance all costs to the Indemnitee on demand so
long
as the Indemnitee has agreed to reimburse you if a court finally determines
that
the Indemnitee was not entitled to indemnification.
(c)
If it
is determined for any reason that our rights to indemnification under Section
6(b) are not available for any reason, then we and the Company will have
rights
of contribution with respect to any such Liability such that (i) we will
be
liable for a proportion determined by dividing our compensation under this
Agreement by the Aggregate Proceeds upon which such compensation is calculated,
and (ii) the Company and its Affiliates will be liable for the remainder.
(d)
The
provisions of Sections 6(a), 6(b), and 6(c) will not apply if, but only to
the
extent that, the Indemnitee did not act in good faith and (i) the Indemnitee
received a financial benefit to which he was not entitled or (ii) with intent
to
cause harm to the Company or your business. If Section 6(a), 6(b) and 6(c)
do
not apply by reason of this Section 6(d), then we will indemnify the Company.
7.
Term.
(a) Either party may terminate this Agreement upon thirty (30) days prior
written notice to the other upon if the other party defaults with respect
to any
obligation under this Agreement; provided that this Agreement will not terminate
if the default is cured within that 30-day period.
(b)
You
may terminate this Agreement without cause at any time upon ten (10) days
prior
written notice to us.
(c)
We
may terminate this Agreement without cause at any time upon ten (10) days
prior
written notice to you.
(d)
The
termination of this Agreement will not affect your obligation to pay us any
amount due under this Agreement or our respective rights and obligations
under
Section 5 and Section 6.
8.
Certain Definitions. When capitalized in this Agreement, the following terms
shall have the meanings set forth in this Section. The singular includes
the
plural and the masculine includes the feminine and the neuter, and vice versa,
as the context requires. Unless expressly provided in this Agreement, all
references to any contract or agreement shall mean the contract or agreement
as
amended from time to time, and all references to any statute shall mean the
statute as amended from time to time, together with any regulations or judicial
and administrative decisions implementing or interpreting that statute.
"Affiliate"
means, with respect to any person or entity, any other person or entity that
controls, is controlled by, or is under common control with that person or
entity, all as determined under the Securities Laws.
"Aggregate
Proceeds" means the aggregate amount of cash paid to the Company in connection
with the Transaction for sales of securities of the Company.
"Confidential
information" means information concerning the Company and your business that
is
(i) disclosed in a writing marked "confidential" or (ii) disclosed orally
and
identified as "confidential" in writing prior to or within ten (10) days
following disclosure. Confidential Information does not include information
(i)
that is or becomes publicly available or generally known to persons in your
industry without breach of our obligations under this section, (ii) in our
possession as of the date of this Agreement, unless notified that such
information is "confidential", (iii) received by us after the term of this
Agreement, unless notified that such information is "confidential",(iv) received
from persons having no obligation of confidentiality to you, or (v) that
we
independently develop without reference to any Confidential Information.
"Transaction"
means any transaction or series of related transactions between the Company
and
parties on the Approved Investor List involving the issuance and sale by
the
Company of any class or series of its equity securities or any securities
convertible into or exchangeable for its equity securities.
"Approved
Investor List" means a written list of potential investors that have been
pre-approved by the Company to be contacted directly by us on the Company's
behalf.
"Indemnitee"
means each of Berkley Financial Services (BFS) Ltd. any officer. director,
employee, agent, counsel, or representative of either of the foregoing, and
any
person performing services to or on behalf of the Company under this Agreement.
"Liability"
means any liability, loss, claim, action, cause of action, settlement, or
other
cost or expense.
"Securities
Laws" means the Securities Act of 1933, the Securities Exchange Act of 1933,
and
any Federal or state statute governing the issuance and sale of securities.
"Underwriter"
means any broker or dealer licensed to effect transactions in securities
under
Securities Laws.
9
Entire
Agreement; Amendment. This Agreement represents the entire agreement and
understanding between us concerning our services and supersede ail prior
and
contemporaneous agreements, understandings. representations and warranties.
This
Agreement may not be amended, changed or modified except by a written
installment executed by or on behalf of both you and us.
10.
Assignment. Neither xxxxx may assign this Agreement to any other party without
the other xxxxx's prior written consent, except that you may assign this
Agreement to any party that acquires substantially all of the assets and
the
goodwill of the Company.
February
23, 2005 Page 3
11.
Binding Effect; No Third Party Beneficiaries. This Agreement is binding upon
and
inure to the benefit of the parties and our respective successors, transferees:
and assigns. No person other than the parties to this Agreement has any legal
or
equitable right, remedy or claim under this Agreement.
12.
Waivers and Consents. No waiver of any breach of any of the terms of this
Agreement, nor any consent required or permitted to be given hereunder, will
be
effective unless in writing and executed by or on behalf of the party or
parties
against whom the waiver or consent is to be enforced. No waiver of any breach
nor consent to any transaction will be deemed a waiver of or consent to any
other or subsequent breach or transaction.
13.
Notices. Any notice required or permitted under this Agreement must be in
writing and will be deemed given if (i) personally delivered. (ii) sent by
facsimile transmission to the party for whom such notice is intended at the
fan
number set forth below, or (iii) sent by registered or certified US. Mail,
or by
nationally recognized delivery service, postage prepaid, to the party for
whom
such notice is intended at the address set forth below. Either party may
change
the address or fax number by giving notice of to the other party in the manner
provided in this Section.
14.
Governing Law. This Agreement will be governed by and construed in accordance
with the laws of the State of North Carolina applicable to agreements made
by
residents of that state and wholly performed in that state.
15.
Arbitration. Any dispute or claim under this Agreement or otherwise relating
to
our services must be resolved by arbitration in Orange County, North Carolina
under the rules of the American Arbitration Association then in effect. A
judgment on any arbitration may be entered in any court in North Carolina
or any
other state or country having appropriate jurisdiction.
16.
Construction and Interpretation. (a) Each party has had the opportunity to
consult with legal counsel regarding the provisions of this Agreement. Every
covenant, term and provision of this Agreement will be construed according
to
its fair meaning and not strictly for or against any party or parties.
(b)
When
used in this Agreement, the term "including" means "including, but not limited
to".
(c)
Captions of the several sections of this Agreement are for reference purposes
only, are not intended to describe, interpret, define or limit the scope,
extent
or intent of this Agreement or any provision hereof, and will not control
or
alter the meaning of this Agreement as set forth in the text.
17.
Counterparts. This Agreement may be executed in any number of counterparts
and
all executed counterparts will constitute one agreement binding on all parties
to this Agreement, notwithstanding that all parties have not signed the same
counterpart.
Please
confirm your agreement by signing below and returning a fully executed
counterpart of this Agreement to us. We look forward to working closely with
you
and to an enthusiastic response from the market.
|
BERKLEY
FINANCIAL SERVICES (BSF) LIMITED
BY:
/s/ Illegible
Title:
by means of POA
Date:
3/3/05
Registered
Office: Post Office Box 1026
The Valley
Anguilla
British West Indies
|
Agreed
and Accepted
SMART
ONLINE, INC.
By
/s/ Xxxxxxx Xxxxx
Title:
President and CEO
Date:
3/14/05
