Exhibit 4.25
September 1, 2002
Gideon Mantel, CEO
Commtouch Software Ltd.
C/o Commtouch Inc.
1300 Crittenden Lane,
Suite # 102,
Mountain View, CA 94043
Dear Gideon,
I am glad to continue working with you and am glad we were able to reach an
agreement for the terms of our engagement. Here are the terms of our proposed
engagement. If this proposal is acceptable to you, please return one executed
copy of this letter to me. We are looking forward to working with you on this
opportunity.
1. Engagement AxcessNet Ltd. will be retained as of September 1, 2002, to
advise Commtouch in fund-raising and in facilitating strategic
commercial transactions. Our engagement will continue until terminated
by one of us by a ten (10) day written notice to the other. We shall
attempt to attract the agreed upon Qualified Entities and when
appropriate, enter into discussions, arrange meetings and try to
facilitate relationships with the most suitable candidates. Once an
adequate situation is identified, AxcessNet will help you prepare a
structure for the proposed transaction, and assist in facilitating
negotiations with the Qualified Entities. AxcessNet will further assist
in setting realistic expectations for both parties, and will advise
Commtouch on establishing proper procedures to maximize the success and
durability of the relationships.
AxcessNet will operate as your consultant and facilitator, under
confidentiality and shall not share your confidential information with
any third party without your permission.
2. Compensation: Subject to Section 2.3 below, our fees for the above
services will include the following components:
2.1 Success fees equal to 5% of all Qualified Gross Proceeds and
of all Qualified Securities Proceeds transferred with respect
to each Qualified Entity;
Subject to Section 2.2. below, payment for Qualified
Securities Proceeds will be made in the form of either cash or
Commtouch's warrants or a combination thereof at AxcessNet's
discretion. Cash payment will be due immediately upon each
transfer of Qualified Gross Proceeds or Qualified Securities
Proceeds. Payments in the form of warrants will be based on
the enclosed Warrant To Purchase Ordinary Shares and the
relevant terms regarding registration rights included in the
Consulting Agreement dated September 1, 2002. The Warrant To
Purchase Ordinary Shares will be issued upon closing each
transaction and will allow AxcessNet to buy ordinary shares of
Commtouch. The number of warrants that will be allocated to
AxcessNet will be calculated as follows: Number of warrants =
Dollar Value of Qualified Securities Proceeds / (divided by)
$0.29. The warrants will be valid for a period of 5 years and
will have an exercise price of $0.01 per share.
In the event of a Business Combination the success fee will be
payable with a minimum fee of $100,000, and payment will be
due whether the consideration is paid or received by
Commtouch, the Qualified Entity or their shareholders directly
or in escrow.
Within four (4) months after the end of each fiscal year,
Commtouch will provide AxcessNet with a report, detailing all
Qualified Gross Proceeds and Qualified Securities
Proceeds paid to or received by Commtouch throughout the year.
Success fees shall be payable for five (5) years following the
first transfer of Qualified Gross Proceeds or Qualified
Securities Proceeds to Commtouch from each Qualified Entity.
Our right to receive success fees with respect to Qualified
Entities, who are non-Israeli related and with whom Commtouch
will first transact business during the term of this agreement
or within twelve (12) months after the termination of this
agreement, shall survive such termination and continue for a
period of five (5) years.
2.2 Notwithstanding the above under Section 2.1, should AxcessNet
choose to receive warrants as compensation for Qualified
Securities Proceeds received by Commtouch and the amount of
the warrants is to exceed 250,000, Commtouch shall have the
right, at its sole discretion, to choose to pay such amount in
excess of the 250,000 warrants in cash.
2.3 Notwithstanding the above, should Commtouch be acquired by a
third party and AxcessNet, upon the closing of said
acquisition, is then entitled to continued or potential future
payment of success fees based on Qualified Gross Proceeds to
be received by Commtouch, Commtouch shall be entitled to fully
liquidate its obligations to AxcessNet hereunder by way of a
one-time payment equal to twenty-four (24) (or the number of
months for which success fees are to be paid hereunder, if
less than 24) months' payments of success fee(s) to be made by
Commtouch to AxcessNet. In computing the appropriate
"liquidation fee" under this subsection, the expected future
value of Qualified Gross Proceeds shall be taken into
consideration. The parties agree to negotiate in a timely
fashion and in good faith the liquidation fee to be paid on
behalf of such additional future Qualified Gross Proceeds, if
any. Should they not arrive at a mutually acceptable
resolution within seven (7) days of negotiation, the amount of
the liquidation fee to be paid on account of the additional
future Qualified Gross Proceeds shall be brought before an
arbitrator to be or to be appointed by Itzhak Forer of Ernst &
Young. The arbitrator shall decide the issue within seven (7)
days of receiving the matter, and the parties shall make
themselves accessible to the arbitrator during this period.
The arbitrator's decision shall be final and non-appealable.
This arbitration clause supersedes the terms of Section 4
below with respect to the matter of determining the
liquidation fee to be made on account of additional future
Qualified Gross Proceeds.
2.4 Reimbursement of all reasonable and necessary out-of-pocket
expenses including travel and communications, provided that
each trip outside of the Boston metropolitan area and each
expense of more than a nominal amount will be subject to your
prior written approval.
2.5 Additional compensation paid as a Closing fee in the amount of
$15,000, payable in cash upon reaching the first agreement
with each Qualified Entity or first receiving Gross Proceeds
from each Qualified Entity, whichever occurs first. AxcessNet
agrees to waive the Closing fee for the Term of the Consulting
Agreement dated September 1, 2002 or until termination of said
Consulting Agreement, whichever occurs first, all as defined
therein.
3. Definitions For purposes of this Agreement:
(a) "Proceeds" shall mean all proceeds including, but not limited
to, all cash, notes, stock, securities, services, goods,
discounts or any other thing of value. Other than cash, all
Proceeds shall be valued at their fair market value as
reasonably determined by the parties hereto.
(b) "Securities Proceeds" shall mean all Proceeds paid or received
in exchange for the sale of securities.
(c) "Gross Proceeds" shall mean all Proceeds paid or received in
exchange for the sale of products, services, or other items
other than securities.
(d) "Qualified Entities" shall mean any entities agreed upon in
writing, and said list may be amended from time to time by an
email from Commtouch addressed to AxcessNet confirming the
addition of groups of entities to the list of Qualified
Entities, or any subsidiary, Affiliate or successor of any
such person or entity, as well as any person or entity
indirectly introduced through said Qualified Entities.
A limited partner in any Qualified Entity who co-invests in
Commtouch along with such Qualified Entity will also be
considered a Qualified Entity. An Israeli related investment
firm or other Israeli entity shall remain a Qualified Entity
for a period of six (6) months as from its inclusion in the
aforementioned list, and shall also survive termination of
this agreement and continue for the remaining period of these
six (6) months. If at any time during the six (6) month period
the Qualified Entity shall sign on an agreement with Commtouch
resulting in Qualified Gross Proceeds or Qualified Securities
Proceeds being received by Commtouch, the entity shall remain
a Qualified Entity for such period as contemplated herein in
order for AxcessNet to receive its full compensation as
described in Section 2 above.
A non-Israeli related investment firm or other non-Israeli
entity shall remain a Qualified Entity for a period of twelve
(12) months as from its inclusion in the aforementioned list.
If at any time during the twelve (12) month period the
Qualified Entity shall sign on an agreement with Commtouch
resulting in Qualified Gross Proceeds or Qualified Securities
Proceeds being received by Commtouch, the entity shall remain
a Qualified Entity for such period as contemplated herein in
order for AxcessNet to receive its full compensation as
described in Section 2 above.
(e) "Qualified Gross Proceeds" shall mean any Gross Proceeds
received by Commtouch from a Qualified Entity.
(f) "Qualified Securities Proceeds" shall mean any Securities
Proceeds received by Commtouch or its shareholders for the
sale of Commtouch's securities to a Qualified Entity, or to
other entities in an investment round led by a Qualified
Entity, or any Securities Proceeds paid by Commtouch to a
Qualified Entity or to the shareholders of a Qualified Entity
for the sale of the Qualified Entity's securities. For
clarification purposes, in no event is AxcessNet to enjoy
double payments from Commtouch as a result of shares of stock
in Commtouch and a third party being exchanged in the same
transaction or set of transactions.
(g) "Business Combination" shall mean any transaction or related
series or combination of transactions whereby, directly or
indirectly, control of Commtouch or all or substantially all
of its business or assets is acquired by a Qualified Entity in
a sale or exchange of stock, merger or consolidation, sale of
assets or other similar transaction.
(h) "Affiliate" shall include a parent corporation, a subsidiary
corporation or any other entity with a twenty percent (20%) or
more common ownership with an entity or person.
Notwithstanding the foregoing, Commtouch KK (Japan) is
explicitly excluded from inclusion in the definition of
Affiliate.
(i) "Commtouch" shall mean together with all its subsidiaries and
Affiliates.
4. Arbitration Any controversy or claim arising out of, or relating to, this
agreement, or its breach, shall be settled by arbitration in accordance
with the then governing rules of the American Arbitration Association.
Judgment upon the award rendered may be entered and enforced in any court
of competent jurisdiction, including courts in the United States and
Israel.
5. Governing LawThis agreement shall be governed by and construed in
accordance with the laws of the State of California. AxcessNet shall
perform all the work contemplated hereunder in the United States.
Sincerely,
/s/ Eyal Shavit
---------------
Eyal Shavit
President
We accept and confirm all the terms of our agreement as stated in this letter,
/s/Gideon Mantel
- ----------------
By: Gideon Mantel
Title: CEO
Date:
To: AxcessNet Ltd.
Attn: Eyal Shavit, President
Re: Amendment 1 to Advisory Agreement
Dear Eyal,
This Amendment to the advisory agreement dated September 1, 2002 (the "Advisory
Agreement"), effective September 1, 2002, sets forth the amended terms and
conditions regarding AxcessNet compensation for providing certain advisory
services to Company, as follows:
1. Notwithstanding any other term to the contrary in the Advisory
Agreement, AxcessNet Ltd. agrees that it shall not be entitled
to any compensation under the Advisory Agreement on behalf of
any of its activities relating to the "Other Target" on
Exhibit A to the Advisory Agreement known as "Dennis Bennie
and his controlled Entities".
2. In relation to paragraph 1 above, AxcessNet Ltd. voluntarily
waives any and all rights to make claims for compensation of
any kind based on its activities in relation to Dennis Bennie
and/or his controlled Entities, including, but not limited to,
claims based on transaction(s) between Dennis Bennie and/or
his controlled entities and Commtouch leading to the
generation of Qualified Gross Proceeds and/or Qualified
Securities Proceeds, as defined in the Advisory Agreement.
Except to the extent amended hereby, the terms and conditions of the Advisory
Agreement shall remain in full force and effect as between the parties hereto
throughout the term of the Advisory Agreement.
If the foregoing accurately reflects the mutual agreement between you and
Commtouch Software Ltd., please sign in the space below.
/s/Gideon Mantel
- -----------------------
Commtouch Software Ltd.
Gideon Mantel, CEO
December 1, 2002
/s/ Eyal Shavit
- -----------------------
AxcessNet Ltd.
Eyal Shavit, President
December 1, 2002