EXHIBIT 10.1
October 15, 1999
Mr. Mark Gray
WebPartners, Inc,
2001 Siesta Drive
Sarasota, Florida 34239
Dear Mark:
This letter will confirm the retention of Technology & Dispute Resolution
Consulting, Inc. ("TDRC") by WebPartners, Inc. ("WebPartners") to provide
independent professional consulting services axed to develop and implement a
Licensing and Technology Transfer Program. TDRC acknowledges that all materials
disclosed to it by WebPartners, and the work it performs for WebPartners
hereunder, are confidential and proprietary, and TDRC will abide by all
reasonable restrictions placed on it by WebPartners on the dissemination of such
materials and work.
In the event that TDRC is served with a subpoena or other legal document
request requesting the disclosure of such materials or work, TDRC will promptly
advise WebPartners of same and TDRC will cooperate with all reasonable and
lawful requests by WebPartners to prevent the disclosure of confidential and/or
proprietary information pursuant to such subpoena or other request. Any and all
studies, reports, surveys of data, client information packages or other
information prepared by TDRC in connection with its work for WebPartners in
connection with this Agreement shall be the property of WebPartners.
OUTLINE OF CONSULTING SERVICES:
TDRC agrees to provide the following consulting services in connection with
developing and implementing the Licensing and Technology Transfer Program.
(A) BUSINESS PLAN / STRATEGIC ANALYSIS
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Working in conjunction with WebPartners, TDRC will prepare a business plan
outlining the strategic direction of WebPartners. TDRC will conduct a
detailed market analysis of the relevant industries including on-line
advertising, the Internet and advertising among others. The market analysis
will focus on defining the market arid identifying trends and potential
clients, among other things. TDRC will also assist WebPartners identify and
define their specific market objectives and their organizational structure.
The business plan will also include a study of WebPartners' direct
competitors. TDRC will also create detailed financial projections for the
business plan. The projections will include an income and cash flow
statement, balance sheet, ratio analysis and break-even analysis.
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TDRC will also develop a power point presentation based on information
contained in the business plan.
(B) VALUATION
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TDRC will conduct a valuation study of WebPartners whose principal asset is
its IOUi, DVT and CyberSpot technologies. The valuation will be base on the
strategic direction(s) of WebPartners as outlined in the business plan. The
valuation study will utilize an emerging technology theory with primary
emphasis placed on the income approach. TDRC will focus its efforts on
preparing discounted cash flow analyses. TDRC will evaluate the following
variables in preparing its cash flow projections: market share and size,
competition, capital needs, economic life of technology and. profitability
among others. TDRC will also research current market transactions to
determine prices and premiums currently being paid for comparable
companies.
(C) LICENSE NEGOTIATIONS
---------------------
TDRC will assist in negotiations, at WebPartners' request, with potential
licensees on behalf of WebPartners. As part of the negotiations, TDRC will
prepare a customized licensing proposal for potential licensees. TDRC will
also prepare financial models to be used during negotiations. At
WebPartners' request, TDRC will coordinate all aspects of the license
negotiation process, including conducting face-to-face meetings with
potential licensees.
(D) TRANSACTION NEGOTIATIONS
-------------------------
TDRC will assist in negotiations, at WebPartners' request, with any
potential acquirer or merger partner. As part of the negotiations, TDRC
will prepare valuation and financial models to be used during negotiations.
TDRC will also evaluate all financial proposals and offers on behalf of
WebPartners. At WebPartners request, TDRC will coordinate all aspects of
the acquisition or merger negotiation process, including conducting
face-to-face meetings with potential acquirers or merger candidates.
(E) PATENT LICENSE NEGOTIATIONS
-----------------------------
TDRC will assist WebPartners and counsel to identify and contact companies
interested in licensing or companies who appear to be infringing
WebPartners' patented (or patent pending) technology, and assist in any
negotiations of licensing agreements for the WebPartners technology with
such companies. TDRC will also assist WebPartners negotiate license or
technology transfer agreements with companies identified by WebPartners or
TDRC as possessing technology desired by WebPartners.
(F) ROYALTY AUDITS
---------------
TDRC will assist WebPartners in connection with the collection of license
fees from licensees. TDRC's assistance will include receiving, reviewing
and analyzing licensee royalty statements and / or DVT activity logs. TDRC
will coordinate the implementation of the licensing program with the
licensee to ensure that royalty calculations are consistent with the
License Agreement. TDRC will also conduct periodic audits of royalty
statements with licensees. Furthermore, TDRC will provide periodic reports
to WebPartners. Finally, TDRC will consult with WebPartners, in
non-testimonial roles, in connection with any litigation brought against
licensees to enforce WebPartners legal rights, including the determination
of possible settlement and payment terms.
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(G) OTHER
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Projects requests outside the scope of work contemplated in projects A - F
will be evaluated on a project by project basis.
FEE ARRANGEMENT:
(A) RETAINER
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WebPartners agrees to pay TDRC a retainer of $50,000 within 60 days of
executing this engagement letter. If the retainer is not paid ire full
within 60 days, then the retainer will increase to $75,000. The retainer
will be credited back to WebPartners from future TDRC Commissions (as
defined in paragraphs B, C and D below). Once TDRC's total Commissions
(excluding the retainer) equal $500,000, then TDRC will issue a credit
equal to one-half of the retainer paid to TDRC starting with TDRC's next
Commission invoice to WebPartners. Once TDRC's Commissions (excluding the
retainer) equal $1,000,000, then TDRC will issue a credit equal to the
remaining retainer paid to TDRC starting with TDRC's next Commission
invoice to WebPartners.
(B) ACQUISITION / PURCHASE /MERGER OF WEBPARTNERS
--------------------------------------------------
In the event WebPartners is acquired / merged / purchased ("Transaction")
and TDRC has provided substantial direct assistance, as determined by
WebPartners, in the negotiation process, then TDRC will receive a
Commission equal to 1.50% of the total Transaction value. However, the
total Commission paid to TDRC shall not be less than the compensation due
TDRC under the applicable Option outlined below.
In the event WebPartners is acquired / merged / purchased and TDRC has not
provided substantial direct assistance, as determined by WebPartners, then
TDRC shall be compensated as follows:
OPTION l:
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If a Transaction occurs within three (3) months of the execution of this
engagement letter, then TDRC will be entitled to its total professional
fees at its standard hourly rates, incurred as of the closing date of the
Transaction, plus a bonus. The bonus, if any, will be entirely at the
discretion of WebPartners. However, the total compensation (excluding the
bonus) paid to TDRC, under this option, shall not exceed 5% of the
transaction value.
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OPTION 2:
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If a Transaction occurs four (4) to six (6) months after the execution of
this engagement letter, then TDRC will be entitled to its total
professional fees at its standard hourly rates, incurred as of the closing
date of the Transaction, times 1.5, plus a bonus. The bonus, if any, will
be entirely at the discretion of WebPartners. However, the total
compensation (excluding the bonus) paid to TDRC, under this option, shall
not exceed 7.5% of the transaction value.
OPTION 3:
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If a Transaction occurs after the sixth (6) month from the date of
execution of this engagement letter, then TDRC will be entitled to its
total professional fees at its standard hourly rates, incurred as of the
closing date of the Transaction, times 2.0, plus a bonus. The bonus, if
any, will be entirely at the discretion of WebPartners. However, the total
compensation (excluding the bonus) paid to TDRC, under this option, shall
not exceed 10% of the transaction value.
(C) EQUITY INVESTMENT
------------------
In the event WebPartners receives an equity investment and TDRC has
provided substantial direct assistance in the negotiations with the
investor, then TDRC will receive a Commission equal to 1.5% of the
investment. If TDRC has not provided substantial direct assistance in the
negotiations with the investor or met with the investor on behalf of
WebPartners, then TDRC will not receive a Commission.
If TDRC is responsible for negotiating an equity investment that allows the
current shareholders to cash out some or all of their equity holdings, then
TDRC will receive a special bonus equal to 5% of the value received
directly by the shareholder(s).
(D) LICENSING OR SERVICE AGREEMENT
---------------------------------
If WebPartners enters into a licensing or service agreement with a Company
and TDRC has assisted in the negotiations with the Company or met with the
Company on behalf of WebPartners, then TDRC will receive a Commission equal
to 5% of the license fees or service revenue generated by the Company
during the first two years of the relationship. After the second year and
continuing through the fifth year of the relationship between WebPartners
and the Company, TDRC will receive a Commission equal to 2.5/0 of the
license fees or service revenue contribution to WebPartners. After the
fifth year, TDRC will no longer receive a Commission related to that
particular Company. WebPartners, however, has the option to hire TDRC to
conduct royalty audits on the Company at TDRC's standard hourly rates.
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The annual Commission paid to TDRC from Licensing or Service Agreements
will not exceed $1 million on a per Company basis. Furthermore, TDRC's
total annual Commission from Licensing or Service Agreements will not
exceed $5 million. However, if TDRC's professional fees at its standard
hourly rates times 1.5 exceeds $5 million, then WebPartners will reimburse
TDRC for the difference between its professional fees at its standard
hourly rates times 1.5 and $5 million.
TDRC hereby waives any claim to commissions related to any licensee, whom
TDRC determines a conflict or other condition exists, that prevents TDRC
from performing its duties under this Agreement.
(E) WEBPARTNERS IPO
----------------
In exchange for the services provided under paragraphs A and B from the
Outline of Consulting Services section discussed above, TDRC will receive
an equity interest in WebPartners. The equity interest will be determined
as follows:
(1) If WebPartners completes an initial public offering within six
(6) months of the execution of this engagement letter, then TDRC
will receive a 1% equity interest in WebPartners.
or:
--
(2) If WebPartners completes an initial public offering after six (6)
months from the date of execution of this engagement letter, then
TDRC will receive a 1.5% equity interest in WebPartners.
(F) JOB EXPENSES
-------------
WebPartners agrees that in addition to any other compensation TDRC receives
under this engagement, WebPartners will pay and reimburse TDRC for TDRC's
out-of-pocket expenses incurred in connection with this engagement,
including reasonable travel, lodging, telephone, and copying expenses ("Job
Expenses") approved by WebPartners. TDRC shall bill its Job Expenses to
WebPartners on a monthly basis.
(G) MONTHLY REPORTS
----------------
TDRC agrees to provide monthly statements to WebPartners detailing TDRC's
total monthly professional fees incurred at its standard hourly rates. TDRC
recognizes that these statements and our professional fees do not represent
a liability on behalf of WebPartners, except under the conditions outlined
in paragraphs B and D of this section. These statements are provided for
informational purposes only. In addition to the monthly statement, TDRC
also agrees to provide WebPartners a monthly report outlining the work
performed by TDRC dicing the month.
(H) LATE PAYMENTS
--------------
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The parties agree that interest will accrue at the prime rate on all payments
due under this Agreement that are not paid within forty-five (45) days of their
payment date.
TERMINATION:
The patties agree that at or during the twelfth (12) month of this engagement
they will reevaluate the success of the Licensing and Technology Transfer
Program and, to the extent mutually agreed, they may modify the payment terms
under this Agreement ("Mutual Termination"). In the event of a Mutual
Termination, TDRC will be entitled to payment for accrued Job Expenses and
Commissions that have accrued from licensees (to which TDRC has not waived its
claim) prior to the date of Mutual Termination plus future Commissions related
to agreements executed with licensees prior to such termination.
To the extent that one party desires to terminate this agreement and the patties
cannot agree to a Mutual Termination, WebPartners may terminate this Agreement
upon thirty (30) days written notice to TDRC (via facsimile and regular mail at
the address set forth above or such other address TDRC may designate)
("WebPartners Unilateral Termination"). In the case of a WebPartners Unilateral
Termination, TDRC shall be reimbursed and paid by WebPartners (within thirty
(30) days of the date of termination) under one of the following methods
selected by TDRC on the date of termination:
(1) At TDRC's standard hourly billing rates for all time incurred on
this engagement by TDRC personnel, as set forth below, plus
accrued Job Expenses, net of Retainer amounts and other fees and
expenses paid by TDRC pursuant to this Agreement.
or:
--
(2) Accrued Job Expenses plus total Commissions that have accrued
from licensees (to which TDRC has not waived its claim) prior to
such termination plus future Commissions related to agreements
executed with licensees prior to such termination. Also,
Commissions and other amounts subsequently received from
potential licensees, to whom TDRC has sent a licensing proposal
and / or TDRC has met with to discuss the licensing proposal, who
in fact becomes a licensee of WebPartners within twelve (12)
months of the WebPartners Unilateral Termination.
To the extent that WebPartners terminates this engagement for cause (i.e., any
material default under this agreement), has notified TDRC in writing of
WebPartners' intention to terminate this Agreement and allowed TDRC at least
thirty (30) days to cure such defaults) and TDRC has not cured such default(s),
TDRC shall not be entitled to future Commissions related to agreements executed
with licensees prior to such termination. Furthermore, TDRC is not entitled to
payment for accrued professional fees at TDRC's standard hourly rates. TDRC will
only be entitled to payment for accrued lob Expenses plus Commissions that have
accrued from licensees (to which TDRC has not waived its claim) prior to such
termination.
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TDRC may terminate this Agreement at any time upon thirty (30) days written
notice to WebPartners (via facsimile and regular mail at the address set forth
above) ("TDRC Termination"). In the event of a TDRC Termination under this
paragraph, TDRC will be entitled to payment for accrued rob Expenses plus
Commissions that have accrued from licensees (to which TDRC has not waived its
claim) prior to such termination plus future Commissions related to agreements
executed with licensees prior to such termination.
TDRC will organize a team for purposes of this engagement. The team will
include the leader of TDRC's Technology Transfer and Licensing division, David
A. Kennedy as the engagement Executive Vice President and Robert A. Hutchins as
the engagement Manager. David and Rob will be assisted by others as appropriate.
The hourly rates outlined below are guaranteed through December 31, 1999, and
will be utilized to the extent WebPartners requests that TDRC perform other
professional services outside the scope of the Consulting Services discussed
above. TDRC will advise WebPartners thirty (30) days in advance of any increase
in these hourly rates.
Vice President $250 to $400
Principal $200 to $250
Executive Consultant $165 to $195
Senior Consultant $140 to $160
Staff Consultant $115 to $135
Analyst $60 to $80
The parties acknowledge that TDRC has not guaranteed that any licensee will
enter into a license agreement with WebPartners, and that TDRC has not advised
WebPartners with respect to the validity of any of its patents, trademarks or
other intellectual property nor is TDRC expected to opine on infringement by any
licensee. The parties agree that the total liability of TDRC, its officers and
employees, for all claims of any kind arising out of this engagement shall be
limited to the fees paid by WebPartners to TDRC. In no event shall TDRC be
liable for any indirect, consequential, punitive or exemplary damages arising
out of the performance of services under this agreement. TDRC shall not be
liable for any loss or destruction of any valuable documents provided to TDRC
and WebPartners shall be responsible for insuring such. documents against loss
or destruction.
If you wish to engage us to provide the services outlined in the terms of
this Agreement, please sign in the space below and return an original of this
letter to TDRC. An extra original is provided for your records.
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We look forward to providing our services in connection with this matter.
If you have any questions, please do not hesitate to call me.
Very truly yours,
TECHNOLOGY & DISPUTE
RESOLUTION CONSULTING, INC.
By /s/ David Kennedy
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David A. Kennedy
Executive Vice President
AGREED TO AND ACCEPTED:
By: [Illegible]
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Date: 10/20/00
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