Exhibit 10.19
Financial Advisory Services Agreement With Bear, ▇▇▇▇▇▇▇ & Company, Inc.
BEAR
▇▇▇▇▇▇▇
May 23, 2001
SoftNet Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Acting Chairman, CEO and CFO
This letter confirms the agreement (the "Agreement") between SoftNet Systems,
Inc. ("SoftNet" or the "Company") and Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇")
as follows:
1. The Company hereby engages Bear ▇▇▇▇▇▇▇ to act as its exclusive
financial advisor with respect to a review of the strategic
alternatives for the Company, including but not limited to, an
acquisition, a sale of the Company, or any transaction in which capital
or other assets are distributed to the Company's shareholders.
2. Bear ▇▇▇▇▇▇▇ hereby accepts the engagement and, in that connection,
agrees to:
(a) Undertake, in consultation with members of the Company's
management and its Board of Directors, a study and analysis of
the business, operations, financial condition and intangible
assets of the Company;
(b) Assist the Company in identifying and evaluating potential
acquisitions or merger candidates (the "Other Party(ies)"), as
well as other transactions designed to increase shareholder
value including without limitation recapitalizations,
dividends and liquidation, such transactions to constitute
"strategic transactions;
(c) Undertake, in consultation with members of management, a
comprehensive business and financial analysis of potential
acquisitions and strategic transactions, including a strategic
transaction feasibility study and valuation and pricing
analyses;
(d) Present our analyses to the Board of Directors for their
evaluation;
(e) To the extent requested by the Company, assist in structuring,
analyzing financing alternatives for and negotiating
specific Transactions (as defined below);
(f) If requested by the Company and appropriate, render an opinion
(the "Opinion") as to the fairness, from a financial point of
view, to the Company's public unaffiliated shareholders of any
proposed Transaction; and,
(g) Be available at the Company's request to meet with its Board
of Directors to discuss a proposed Transaction and its
financial implications.
3. For purposes hereof, a "Transaction" shall mean any transaction or
series or combination of transactions, whereby, directly or indirectly,
control of or a material interest in the Company or the Other Party or
any of their respective businesses or assets is transferred for
consideration, including, without limitation, issues of capital stock
in connection with an acquisition or combination, a sale or exchange of
capital stock or assets, a lease of assets with or without a purchase
option, a merger or consolidation, a tender or exchange offer, a
leveraged buy-out, a recapitalization, the formation of a joint
venture, minority investment or partnership, an unusual dividend, a
dissolution, or any similar transaction. For the terms of this
engagement, Transaction shall also be defined to include any
transaction or series or combination of transactions, whereby the
assets of the Company are distributed to Company shareholders upon
liquidation of its business.
4. In connection with Bear ▇▇▇▇▇▇▇' engagement, the Company will furnish
Bear ▇▇▇▇▇▇▇ with all information concerning the Company which Bear
▇▇▇▇▇▇▇ deems appropriate and will provide Bear ▇▇▇▇▇▇▇ with access to
the Company's officers, directors, employees, accountants, counsel and
other Representatives
(collectively, the "Representatives").
The Company recognizes and confirms that in performing its duties
pursuant to this Agreement, Bear ▇▇▇▇▇▇▇ will be using and relying
entirely on data, material and other information (the "Information")
furnished by the Company and its Representatives. The Company hereby
agrees and represents that all Information furnished to Bear ▇▇▇▇▇▇▇
pursuant to this Agreement shall be accurate and complete in all
material respects at the time provided, and that if the Information
becomes inaccurate, incomplete or misleading during the term of Bear
▇▇▇▇▇▇▇' engagement hereunder, the Company shall so notify Bear ▇▇▇▇▇▇▇
in writing. The Company further represents and warrants that any
projections or other Information provided by it to Bear ▇▇▇▇▇▇▇ will
have been prepared in good faith and will be based upon assumptions
which in light of the circumstances under which they are made, are
reasonable. Accordingly, Bear ▇▇▇▇▇▇▇ assumes no responsibility for the
accuracy and completeness of the Information. In rendering its services
hereunder, Bear ▇▇▇▇▇▇▇ will be using and relying upon the Information
without independent investigation or verification thereof or
independent evaluation of any of the assets or liabilities of the
Company. All material non-public information concerning the Company
which is given to Bear ▇▇▇▇▇▇▇ will be used solely in the course of the
performance of Bear ▇▇▇▇▇▇▇' services hereunder and will be treated
confidentially by Bear ▇▇▇▇▇▇▇ for so long as its remains non-public.
Except as otherwise required by law, Bear ▇▇▇▇▇▇▇ will not disclose
this Information to any third party without the Company's consent.
5. Bear ▇▇▇▇▇▇▇' compensation for its role as financial advisor shall be
determined as follows:
(a) The Company agrees to pay Bear ▇▇▇▇▇▇▇ a retainer advisory fee
(the "Retainer") of $250,000 payable upon execution of this
Agreement. This retainer fee shall be credited against any
compensation payable under paragraph 5(c) below in the event a
Transaction occurs.
(b) If the Company requests Bear ▇▇▇▇▇▇▇ to render an Opinion, the
Company agrees to pay Bear ▇▇▇▇▇▇▇ an opinion fee (the
"Opinion Fee") of $500,000 when, following request by the
Company, Bear ▇▇▇▇▇▇▇ informs the Company that it is prepared to
render its Opinion.
(c) If, during the duration of this Agreement or within 12 months
after termination of this Agreement as discussed below, the
Company announces a Transaction, the Company agrees to pay
Bear ▇▇▇▇▇▇▇ a fee of $750,000 upon any public announcement of
the Transaction (the " Announcement Fee"); plus
(d) If, during the duration of this Agreement or within 12 months
after termination of this Agreement as discussed below, the
Company consummates a Transaction, the Company agrees to pay
Bear ▇▇▇▇▇▇▇ a fee of $500,000 upon the closing of the
Transaction (the "Closing Fee").
The compensation pursuant to clause 5(d) above shall be payable by the
Company to Bear ▇▇▇▇▇▇▇ upon the acquisition of 50% or more of the
voting power of the Other Party (or Company's) outstanding voting
securities in the case of a tender offer or two-step acquisition or, in
the case of a merger, asset acquisition or other form of acquisition
transaction, upon the closing of such transaction.
Bear ▇▇▇▇▇▇▇ shall have the exclusive right to act as lead book-running
manager for all debt (other than bank financing), equity or equity
related securities, as well as counterparty for all related derivative
transactions in connection with or related to the Transaction for a
period of twelve months from the date of this Agreement, in each case
on terms and conditions customary for Bear ▇▇▇▇▇▇▇ for similar
transactions.
6. The Company shall reimburse Bear ▇▇▇▇▇▇▇ for all of its reasonable
out-of-pocket fees, expenses and costs (including, but not limited to,
customary travel, accommodations, telephone, courier and supplies) in
connection with the performance of its activities under this Agreement,
including the fees and expenses of its accountants and legal counsel,
if any, and any other advisor retained by Bear ▇▇▇▇▇▇▇, in each case
subject to the approval of the Company, such approval not to be
unreasonably withheld.
All such fees, expenses and costs will be billed periodically by Bear
▇▇▇▇▇▇▇ and are payable when invoiced. Upon termination or expiration
of this Agreement or completion of Bear ▇▇▇▇▇▇▇' assignment, any
unreimbursed fees and expenses will be immediately due and payable. Any
obligation pursuant to this Paragraph 6 shall survive the termination
or expiration of this Agreement.
7. It is understood that if Bear ▇▇▇▇▇▇▇ is requested to render a fairness
opinion as referred to in clause 2(f) above it shall be based upon such
financial review of the Other Party and its business and operations as
Bear ▇▇▇▇▇▇▇ shall reasonably deem appropriate and feasible. Such
review shall be limited to an analysis of
(a) publicly available information with respect to the Other Party,
its outstanding securities and such other matters as Bear ▇▇▇▇▇▇▇
reasonably deems appropriate, and (b) such other information as shall
be supplied to Bear ▇▇▇▇▇▇▇ by the Other Party or the Company. The
Opinion shall be in such form and have such content as Bear ▇▇▇▇▇▇▇
shall determine and as shall be appropriate for such Transactions,
including by stating therein that Bear ▇▇▇▇▇▇▇ has relied upon the
information furnished to it by the Other Party and the Company, has
assumed the accuracy and completeness of such information and has not
attempted independently to verify any of such information.
Furthermore, the Opinion letter may be included in its entirety in any
proxy statement or other document distributed to shareholders of the
Company or any other document as required by law in connection with the
Transaction. However, no summary of or excerpt from the Opinion letter
may be used, and no public reference (other than as provided in the
preceding sentence) to the Opinion letter may be made except with Bear
▇▇▇▇▇▇▇' prior approval, which shall not be unreasonably withheld.
8. Since Bear ▇▇▇▇▇▇▇ will be acting on behalf of the Company in
connection with its engagement hereunder, the Company agrees to
indemnify Bear ▇▇▇▇▇▇▇ in accordance with the indemnification
provisions (the "Indemnification Provisions") attached to this
Agreement, which Indemnification Provisions are incorporated herein and
made a part hereof and which shall survive the termination, expiration
or supersession of this Agreement.
9. The Company further understands that if Bear ▇▇▇▇▇▇▇ is asked to act
for the Company, as a dealer manager in an exchange or tender offer, or
as an underwriter in connection with the issuance of securities by the
Company, or in any other formal additional capacity, then the terms of
the engagement contemplated pursuant to this Agreement and/or any such
additional engagement(s) may be embodied in one or more separate
written agreements, containing provisions and terms to be mutually
agreed upon; provided, however, except as approved by the Company, the
consideration provided in section 5 shall not be modified. The
indemnity provisions of this Agreement shall apply to the engagement
contemplated pursuant to this Agreement and any such additional
engagement and shall remain in full force and effect regardless of any
completion, modification or termination of Bear ▇▇▇▇▇▇▇' engagement(s).
10. ▇▇▇▇ ▇▇▇▇▇▇▇' engagement hereunder may be terminated at any time with
or withoutcause by either Bear ▇▇▇▇▇▇▇ or the Company upon ten days
written notice thereof to the other party, provided, however, that Bear
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▇▇▇▇▇▇▇ will continue to be entitled to the full amount of the Closing
Fee pursuant to the terms and conditions set forth in paragraph 5(d)
above in the event that at any time prior to the expiration of 12
months after such termination the Company completes a Transaction, and
provided, further, that any termination of Bear ▇▇▇▇▇▇▇' engagement
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hereunder shall not affect the Company's obligation to pay the Retainer
set forth in paragraph 5(a) above, the Opinion Fee set forth in
paragraph 5(b) and/or Announcement Fee set forth in paragraph 5(c) and
the fees and expenses to the extent provided in paragraph 6 above, all
to the extent incurred prior to the date of termination, and to
indemnify Bear ▇▇▇▇▇▇▇ and certain related persons and entities with
respect to actions and omissions prior to such termination as provided
in the attached Indemnification Provisions.
11. Except as required by applicable law or otherwise provided above, no
opinion rendered or advice given by Bear ▇▇▇▇▇▇▇, whether formal or
informal, may be disclosed in whole or in part, or summarized,
excerpted from or otherwise publicly referred to, or made available to
third parties without Bear ▇▇▇▇▇▇▇' prior written consent and neither
Bear ▇▇▇▇▇▇▇ nor its advice may be otherwise publicly referred to
without its prior written consent.
12. The Company agrees that Bear ▇▇▇▇▇▇▇ has the right to place
advertisements in financial and other newspapers and journals at its
own expense describing its services to the Company hereunder, provided
that Bear ▇▇▇▇▇▇▇ will submit a copy of any such advertisements to the
Company for its approval, which approval shall not be unreasonably
withheld or delayed.
13. This Agreement does not create, and shall not be construed as creating,
rights enforceable by any person or entity not a party hereto, except
those who may be entitled thereto by virtue of paragraph 8 and the
Indemnification Provisions hereof. The Company acknowledges and agrees
that: (i) Bear ▇▇▇▇▇▇▇ is being retained to assist the Company in its
efforts to effect a Transaction and that Bear ▇▇▇▇▇▇▇ is not being
retained to advise the Company on, or to express any opinion as to, the
wisdom, desirability or prudence of consummating the Transaction and
(ii) Bear ▇▇▇▇▇▇▇ is not and shall not be construed as a fiduciary of
the
Company and shall have no duties or liabilities to the equity holders
or creditors of the Company or any other person by virtue of this
Agreement or the retention of Bear ▇▇▇▇▇▇▇ hereunder, all of which are,
subject to applicable law, hereby expressly waived. The Company also
agrees that Bear ▇▇▇▇▇▇▇ shall not have any liability (whether direct
or indirect, in contract, tort or otherwise) to the Company or to any
person (including, without limitation, equity holders and creditors of
the Company) claiming through the Company for or in connection with the
engagement of Bear ▇▇▇▇▇▇▇, this Agreement and the transactions
contemplated hereby (including, without limitation, any Transaction)
except to the extent any such liability is found by a Court of
competent jurisdiction in a final judgment (not subject to further
appeal) to have resulted primarily and directly from the gross
negligence or willful misconduct of Bear ▇▇▇▇▇▇▇.
14. The Company and Bear ▇▇▇▇▇▇▇ acknowledge and agree that there are no
brokers, representatives or other persons which have an interest in
compensation due to Bear ▇▇▇▇▇▇▇ from the Transaction contemplated
herein.
15. If any provision of this Agreement shall be held or made invalid by a
statute, rule, regulation, decision of a tribunal or otherwise, the
remainder of this Agreement shall not be affected thereby and, to this
extent, the provisions of this Agreement shall be deemed to be
serverable.
16. The undersigned represents and warrants that it has all requisite power
and authority, and all necessary authorizations, to enter into and
carry out the terms and provisions of this Agreement.
17. In connection with this engagement, ▇▇▇▇ ▇▇▇▇▇▇▇ is acting as an
independent contractor with duties owing solely to the Company. This
Agreement may not be amended or modified except in writing and shall be
governed by and construed in accordance with the laws of the State of
New York, without regard to conflicts of law principles thereof.
We are delighted to accept this engagement and look forward to working with you
on this assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter.
Very truly yours
BEAR ▇▇▇▇▇▇▇ & CO. INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Managing Director
Accepted and Agreed to:
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Acting Chairman, CEO and CFO