Exhibit ▇▇.▇
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TEL (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
January 29, 2001
Optika Investment Company, Inc.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇ Law Firm
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Gentlemen:
When executed by the undersigned where indicated below, this letter will form an
Advisory Agreement (the "Agreement") for the 24-month period commencing February
2, 2001 between Maroon Bells Capital, L.L.C. a Delaware limited liability
company ("MBC") and Optika Investment Company, Inc. ("Optika") whereby MBC will
provide certain advisory services to Optika on a non-exclusive basis, including
general corporate advisory and business development services.
MBC will devote a portion of its professional resources to Optika during the
course of this agreement; Optika acknowledges that it is engaging MBC on a best
efforts basis.
A. ADVISORY SERVICES TO BE PERFORMED FOR OPTIKA BY MBC.
1. GENERAL CORPORATE ADVISORY SERVICES. MBC will provide as needed, Optika with
advice in connection with (i) acquisition of an initial operating business,
including analysis of its business plan and strategy, due diligence, structuring
and negotiation, and financial strategic alternatives, (ii) review and analysis
of business plans, corporate materials, and investor relations materials for
distribution to prospective investors, (iii) the acquisition, development and
retention of human resources, and the development and implementation of an
effective and flexible organizational design, and development and implementation
of effective and compliant Human Resource policies, practices and associated
employee handbooks; (iv) recruitment for Board and/or other senior positions as
requested, and (v) Merger and acquisition identification, analysis and
structuring. MBC will also assist Optika on an on-going, non-exclusive basis in
identifying placement agents, underwriters, lenders and other sources of
financing during the term of this Agreement, as needed.
COMPENSATION: As consideration to MBC for the commencement of services
hereunder, Optika agrees to (i) pay to MBC the sum of $20,000 per month,
commencing upon the signing by both parties of this advisory agreement; provided
that Optika may, at its option, pay MBC $15,000 per month and accrue $5,000 per
month for the earlier of 6 months or until the Company has raised an aggregate
of $5 million in equity; and (ii) issue MBC warrants to purchase 500,000 shares
of common stock of Optika at an initial price of $1.5 0 per share, with an
exercise term of ten (10) years. The warrants will contain customary
anti-dilution and other protections. The warrants will vest and become
exercisable upon closing of an acquisition or merger with another company or
Optika Investment Company, Inc.
January 29, 2001
Page 2
companies, which has annual revenues of $ 1,000,000, or has an aggregate
acquisition value of at least $10,000,000.
2. FINANCIAL ADVISORY SERVICES: MBC may identify and contact, on anon-exclusive
basis, certain venture capital, underwriters and investment banking companies
and other strategic investors that may provide Optika with financing or that may
agree to assist Optika in equity or debt offerings. MBC will regularly inform
Optika regarding the status of these MBC financing contacts.
COMPENSATION: Optika agrees to pay to MBC at Closing in cash a Financing Success
Fee, equal to (a) 10% of gross proceeds from equity financings and/or (b) 1.5%
of gross proceeds of debt financings completed by one or more of the
underwriters or placement agents introduced to Optika by MBC. In addition,
Optika agrees to pay to MBC or its assignees any compensation due to MBC for its
assistance in identifying prospective investors in Optika, pursuant to the
placement terms and conditions of Optika Offering Memorandums.
3. MERGER AND ACQUISITION SERVICES. MBC will assist Optika in identifying
potential merger and/or acquisition candidates. MBC will assist in contacting
pre-approved target companies and in structuring such transactions.
COMPENSATION: Optika agrees to pay to MBC at Closing in cash (or other like-kind
compensation acceptable to MBC) an M&A Success Fee according to a ▇▇▇▇▇▇ Formula
based on the value of the transaction as follows: 5% of the first $1 million in
value, 4% of the second $1 million in value, 3% of the third $1 million in
value, 2% of the fourth $1 million in value and 1% of all value thereafter. In
the event that Optika closes an M&A transaction resulting from a contact of MBC
with a value of $5 million or greater, MBC will receive at closing a performance
bonus of $100,000 (one hundred thousand dollars) payable in cash or like kind
compensation, at the discretion of MBC.
4. GENERAL BUSINESS DEVELOPMENT SERVICES. MBC will assist Optika, on a best
efforts basis, in the identification of new U.S. and international business
development opportunities including but not limited to (i) new marketing and
distribution channels, (ii) new strategic marketing, comarketing, OEM or private
label agreements, or (iii) new technology, hardware or software partners or
equipment.
COMPENSATION: MBC and Optika agree to negotiate in good faith, in advance, a
compensation schedule for Business Development Services provided by MBC on a
case-by-case basis. In general Maroon Bells will expect a fee of approximately
2.5% of the revenues for a period of one year, which compensation shall survive
termination of this Advisory Agreement.
5. RECRUITMENT SERVICES: MBC will provide Optika search and/or recruitment
services for assistance in filling its CEO position, for any position reporting
to the CEO or COO or for Board of Directors positions.
COMPENSATION: MBC will be compensated at the rate of 15% of the first full year
total targeted cash compensation for a full time position and $25,000 for Board
of Director positions.
Optika Investment Company, Inc.
January 29, 2001
Page 3
6. EQUIPMENT LEASING, LINES OF CREDIT, EQUIPMENT FINANCING AND OTHER DEBT OR
CREDIT FACILITIES. MBC may from time to time assist Optika in securing equipment
leases or other equipment financing structures.
COMPENSATION: MBC and Optika agree to negotiate in good faith, in advance, a
compensation schedule for Equipment Financing Services provided by MBC on a
case-by-case basis, with an understanding that such compensation will be a
minimum of 1.5 percent of total lease/credit facilities utilized by Optika,
including any debt or convertible debt financing arranged for or provided by
MBC.
B. EXPENSES
Optika agrees to reimburse MBC upon request for reasonable out-of-pocket travel
expenses related to MBC's performance of the services described in this
Agreement (i.e. travel and lodging for MBC professionals to destinations where
Optika has requested or approved the presence of MBC professionals). Optika
further agrees to reimburse MBC for expenses incurred on behalf of Optika prior
to January 29, 2000 in an amount not to exceed $25,000.
C. TERM OF AGREEMENT
The term of this Agreement shall commence on February 2, 2001 and shall be in
effect for 24 months, automatically renewable for an additional 12 months unless
terminated in writing by Optika. MBC's compensation shall survive termination of
this Agreement for a period of twelve (12) months from the termination date if
Optika enters into a transaction described in paragraphs 2, 3, 4, 5 or 6 during
such time.
D. INDEMNIFICATION
MBC and Optika agree to indemnify and hold each other harmless against claims
resulting from actions or omissions in connection with this engagement or
arising out of willful misstatement of material facts by the other party or its
affiliates or representatives.
E. GOVERNING LAW
This Agreement shall be governed by the laws of the State of California.
F. SIGNATURES
By their authorized signatures below, MBC and Optika do agree to be bound by the
terms of this Agreement. This Agreement may be signed in counterparts, including
fax signatures. Changes in the terms and conditions of this Agreement may be
enacted only with mutual written consent.
Optika Investment Company, Inc.
January 29, 2001
Page 4
G. ACCEPTANCE OR REJECTION BY OPTIKA
Optika shall have the exclusive right, in its sole discretion, to accept or
reject any business opportunity, credit facility, investment or advise
presented, discovered or procured by MBC pursuant to this agreement. In the
event of a rejection by Optika, for any reason, MBC shall not be entitled to any
of the compensation that would have been payable hereunder if the transaction
had been consummated. MBC is, furthermore, not authorized to enter into any
agreements with any person or entity on behalf of Optika.
H. CONFIDENTIALITY
In the course of rendering the services provided for in this Agreement, MBC will
learn and may develop information which is considered by Optika to be
confidential. MBC agrees not to use or disclose such confidential information,
except for the purpose of performing its duties hereunder, without the express
written consent of Optika.
ACCEPTED FOR OPTIKA INVESTMENT COMPANY, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
ACCEPTED FOR MAROON BELLS CAPITAL L.L.C.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director