COMMONWEALTH ASSOCIATES, LP
COMMONWEALTH
ASSOCIATES, LP
June 3,
2008
Aftersoft
Group, Inc.
Xxxxx
Xxxxx, Xxxxxx Xxx
Xxxxxxx
Xxxxxxxx Xxxx
Xxxxxxx,
XX
XX0
0XX
Xxx
Xxxxxxx
Gentlemen:
This
letter agreement (this "Agreement") sets forth the understanding between
Commonwealth Associates, LP ("Commonwealth") and Aftersoft Group, Inc. (the
"Company") in connection with the engagement of Commonwealth by the Company to
render consulting advice to the Company and to act as the Company's exclusive
merger and acquisitions ("M&A") advisor as described below.
SECTION
1: Services and
Duties
Pursuant
to the terms and conditions set forth in this Agreement, Commonwealth proposes
to undertake the following activities:
(a) For
a period of eighteen (18) months from the date hereof (the "Term"), Commonwealth
shall provide advisory services to the Company under a monthly retainer as set
forth in Section 3(b) herein. The monthly retainer shall provide for the
following services by Commonwealth:
|
(i)
|
Advising
the Company on its capital structure and any proposed capital raising
activities;
|
|
(ii)
|
Assisting
the Company in positioning itself in the public
markets;
|
|
(iii)
|
Assisting
the Company in conducting road show presentations to existing and
prospective investors;
|
|
(iv)
|
Advising
and assisting the Company in developing a general strategy for operational
purposes;
|
|
(v)
|
Familiarization,
to the extent deemed appropriate and feasible, with the business,
operations, properties, financial condition, and prospects of the Company;
and
|
|
(vi)
|
Such
other financial advisory and investment banking services as may from time
to time be agreed upon by Commonwealth and the
Company.
|
(b) During
the Term, Commonwealth shall be the Company's exclusive M&A advisor. In the
event that the Company enters into a merger, acquisition, or sale of assets or
securities ("M&A Transaction"), the Company agrees to appoint Commonwealth
as the Company's exclusive advisor with respect to each M&A Transaction and
to pay to Commonwealth the fees as set forth in Section 3(c)
herein.
SECTION
2: Term of the
Agreement; Termination
(a) This
Agreement shall be for a term of twenty-four (24) months.
(b) Either
Party may terminate this Agreement at any time in the event of a material breach
hereof by the other party. In addition, either Party may terminate this
Agreement, other than because of a material breach by the other party, at any
time upon ninety (90) days' prior written notice, without liability or
continuing obligation, except as set forth in the following
paragraph.
(c) The
termination of this Agreement shall not affect the compensation payable to or
reimbursement of expenses incurred by Commonwealth pursuant to this
Agreement.
SECTION
3: Compensation and
Expenses.
In
consideration for the services rendered by Commonwealth to the Company pursuant
to this Agreement, the Company shall compensate Commonwealth as
follows:
(a) Upon
execution hereof, Warrant to purchase up to three million (3,000,000) shares of
the Company's Common Stock, which Warrant shall be exercisable for five (5)
years at a price: (i) the lower of $.30; or (ii) the effective price for the
Company's shares resulting from the sale of approximately 28,631,622 shares of
Auto Data Network, Inc., the Company's parent (which is in the process of
spinning off the Company) with respect to which Sale Commonwealth may act as
Placement Agent. The Warrant shall contain a customary anti-dilution protection,
and one half of the Warrants (1,500,000) shall contain a cashless exercise
feature.
(b) Compensation
in the amount of $15,000 per month for advisory services for a period of 18
months from the date hereof, and shall be due by the Company within 15 days of
invoicing.
(c) A
fee in connection with an M&A Transaction equal to 5% of the aggregate
consideration paid or received by the Company. For the purposes hereof,
consideration shall mean all cash, property, securities, or assets paid or
received by the Company in connection with such transaction. Such fee shall be
paid to Commonwealth in cash and upon closing of the M&A Transaction.
Commonwealth shall also be reimbursed for all out of pocket expenses incurred by
or advanced in connection with performance of its duties hereunder.
(d) In
connection with the services provided pursuant to this Agreement, the Company
agrees to promptly reimburse Commonwealth, upon request and not more than
monthly, for all out-of- pocket expenses incurred (including, but not limited
to, travel and lodging expenses, and reasonable fees and disbursements of any
counsel, consultants and advisors retained by Commonwealth with the Company's
consent). Furthermore, Commonwealth shall obtain pre-approval for any expenses
which is to exceed $5,000 or (in the case of disbursements of counsel likely to
exceed $5,000).
SECTION
4: Representations,
Warranties, and Covenants.
The
Company represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms. The Company further represents and warrants that consummation of the
Transaction contemplated herein will not conflict with or result in a breach of
any of the terms, provisions or conditions of any written agreement to which it
is a party.
2
SECTION
5: Successors and
Assigns
The
benefits of this Agreement shall inure to the respective successors and assigns
of the parties hereto and of the indemnified parties hereunder and their
successors and assigns, and the obligations and liabilities assumed in this
agreement shall be binding on their successors and assigns; provided that the
rights and obligations of either party may not be assigned without prior written
consent. Any other purported assignment shall be null and void.
SECTION
6: Indemnification
The
Company agrees to indemnify Commonwealth, its principals, members, officers,
employees and agents who participate in any Transaction, as set forth in Annex A, attached
hereto, which provisions shall be incorporated into the definitive agreements
relating to any transaction.
SECTION
7: Notices
Any
notice or other communication to be given to the Company hereunder may be given
by delivering the same in writing to the address set forth above, and any notice
or other communication to be given to Commonwealth may be given by delivering
the same to Commonwealth Associates, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X'Xxxxxxxx, Principal, or in each case, such other
address of which a party shall have received notice. Any notice or other
communication hereunder shall be deemed given three days after deposit in the
mail if mailed by certified mail, return receipt requested, or on the day after
deposit with an overnight courier service for next day delivery, or on the date
personally delivered.
SECTION
8: Miscellaneous.
(a) No
change, amendment or supplement to, or waiver of, this Agreement or any term,
provision or condition contained herein, shall be valid or of any effect unless
in writing and signed by the party against whom such is asserted.
(b) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to conflict of laws rules of such state.
Any action, proceeding or claim against any of the parties hereto arising out
of, or relating in any way to, this Agreement shall be brought and enforced in
the courts of the State of New York or the federal court for the Southern
District of New York, and the parties hereto irrevocably submit to such
jurisdiction, which jurisdiction shall be exclusive. The parties hereto hereby
waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. The parties agree that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.
(c) This
Agreement constitutes the entire understanding between the parties with respect
to the transactions contemplated hereby, and all prior or contemporaneous oral
agreements, understandings, discussions, representations and statements are
superseded by this Agreement. The waiver of any particular condition precedent,
provision or remedy provided by this Agreement shall not constitute the waiver
of any other.
3
(d) This
Agreement may be executed in any number of counterparts, each of which shall be
taken as one and the same instrument, to the same effect as if all the parties
hereto had signed the same signature page. Any signature page of this Agreement
may be detached from any counterpart of this Agreement identical in form hereto
but having attached it to one or more additional signature pages.
(e) The
provisions of this Agreement shall be binding upon and accrue to the benefit of
the parties hereto and their respective heirs, legal representatives, permitted
successors and permitted assigns. Neither party shall have the right to assign
its rights or obligations under this Agreement without the written consent of
the other party.
(f) If
any provision of this Agreement for any reason shall be held to be illegal,
invalid or unenforceable, such illegality shall not affect any other provision
of this Agreement and this Agreement shall be amended so as to enforce the
illegal, invalid or unenforceable provision to the maximum extent permitted by
applicable law, and the parties shall cooperate in good faith to further modify
this Agreement so as to preserve to the maximum extent possible the intended
benefits to be received by the parties.
(g) All
representations, warranties and agreements of the parties hereto contained
herein will survive the delivery and execution hereof and for a period of three
(3) years from the date hereof, and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party hereto
or any person who controls any such party within the meaning of the Securities
Act, and will survive delivery of the Shares, and any termination of this
Agreement.
4
If the
foregoing conforms to your understanding of the arrangements between us, please
sign the copy of this letter provided in the space indicated, whereupon this
letter shall constitute a binding and legal agreement between the Company and
the Placement Agent as of the date first written above.
Very
truly yours,
Aftersoft
Group, Inc.
By:
|
/s/
Xxx Xxxxxxx
|
Name: Xxx
Xxxxxxx
|
|
Title:
President and Chief Executive
Officer
|
Accepted
as of the date first above written:
By:
|
/s/
Xxxxxx X. X’Xxxxxxxx
|
Name: Xxxxxx X. X'Xxxxxxxx | |
Title: Chief Executive Officer and President |
5
ANNEX A:
INDEMNIFICATION
The
Company agrees to indemnify Commonwealth, its principals, members, officers,
employees and agents and other persons who participate in any Transaction, and
their respective employees, directors, officers, agents, affiliates, and each
person, if any, who controls them within the meaning of either Section 20 of the
Securities Exchange Act of 1934 or Section 15 of the Securities Act of 1933
(each such person, including Commonwealth, is referred to as "Indemnified
Party") from and against any losses,
claims, damages and liabilities, joint or several including all legal or other
expenses reasonably incurred by an Indemnified Party in connection with the
preparation for or defense of any threatened or pending claim, action or
proceeding, whether or not resulting in any liability ("Damages"), to which such
Indemnified Party, in connection with its services or arising out of its
engagement hereunder, may become subject under any applicable Federal or state
law or otherwise, including but not limited to liability (i) caused by or
arising out of an untrue statement or an alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact necessary in
order to make a statement not misleading in light of the circumstances under
which it was made, (ii) caused by or arising out of any act or failure to act by
the Company or (iii) arising out of Commonwealth's engagement or the rendering
by any Indemnified Party of its services under this Agreement; provided,
however, that the Company will not be liable to the Indemnified Party hereunder
to the extent that any Damages are found in a final non- appealable judgment by
a court of competent jurisdiction to have resulted from the gross negligence,
bad faith or willful misconduct of the Indemnified Party seeking indemnification
hereunder, or the violation of any federal or state securities law or regulation
by an Indemnified Party.
These
indemnification provisions shall be in addition to any liability which the
Company may otherwise have to any Indemnified Party.
If for
any reason, other than a final non-appealable judgment finding an Indemnified
Party liable for Damages for its gross negligence, bad faith, or willful
misconduct the foregoing indemnity is unavailable to an Indemnified Party or
insufficient to hold an Indemnified Party harmless, then the Company shall and
shall cause the Company, to contribute to the amount paid or payable by an
Indemnified Party as a result of such Damages in such proportion as is
appropriate to reflect not only the relative benefits received by the Company,
as the case may be and its shareholders on the one hand, and Commonwealth on the
other, but also the relative fault of the Company, as the case may be, and the
Indemnified Party as well as any relevant equitable considerations, subject to
the limitation that in no event shall the total contribution of all Indemnified
Parties to all such Damages exceed the amount of fees actually received and
retained by Commonwealth and others who participate in any
Transaction.
Promptly
after receipt by the Indemnified Party of notice of any claim or of the
commencement of any action in respect of which indemnity may be sought, the
Indemnified Party will immediately notify the Company in writing of the receipt
or commencement thereof and the Company shall have the right to assume the
defense of such claim or action (including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of fees and expenses of
such counsel), provided that the Indemnified Party shall have the right to
control its defense if, in the opinion of its counsel, the Indemnified Party's
defense is unique or separate to it as the case may be, as opposed to a defense
pertaining to the Company In any event, the Indemnified Party shall have the
right to retain counsel reasonably satisfactory to the Company, at the Company's
expense, to represent it in any claim or action in respect of which indemnity
may be sought and agrees to cooperate with the Company and the Company's counsel
in the defense of such claim or action, it being understood, however, that the
Company shall not, in connection with any one such claim or action or separate,
but substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys, for all the Indemnified Parties unless the defense of one Indemnified
Party is unique or separate from that of another Indemnified Party subject to
the same claim or action. In the event that the Company does not promptly assume
the defense of a claim or action, the Indemnified Party shall have the right to
employ counsel reasonably satisfactory to the Company, at the Company's expense,
to defend such claim or action. The omission by an Indemnified Party to promptly
notify the Company of the receipt or commencement of any claim or action in
respect of which indemnity may be sought will relieve the Company from any
liability the Company may have to such Indemnified Party only to the extent that
such a delay in notification materially prejudice the Company's defense of such
claim or action. The Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld or delayed. Any obligation pursuant to this Annex shall
survive the termination or expiration of this Agreement.
6