Services Agreement - SheerVision Inc. and Hallmark Capital Corp.
HALLMARK
CAPITAL
230 Park Avenue Suite 2430
New York, NY 10169
Tel: 212-249-9634
Fax: 212-249-9537
www.hallmarkcapital.com
September 15, 2005
SheerVision, Inc.
4040 Palos Verdes Drive North Ste. 105
Rolling Hills Estates, CA 90274
Attn: Ms. Suzanne Lewsadder
Mr. Jeff Lewsadder
Gentlemen:
We are pleased to set forth the terms of the retention of Hallmark Capital
Corp. ("HALLMARK") by SheerVision, Inc. (collectively with its affiliates,
"SHEERVISION").
1. Hallmark shall, on a non-exclusive basis, assist SheerVision with
advancing its overall business and strategic objectives. Hallmark hereby agrees
to become a strategic and business consultant to SheerVision and to render such
advice, consultation, information and services to SheerVision regarding general
investor relations, corporate finance, and business development consisting of
the following:
(a) assist SheerVision with strategic planning, including analyzing
SheerVision's business and revenue models and capital structure, and
identifying strategic partners;
(b) advise SheerVision with respect to business and management issues;
and
(c) advise and assist SheerVision with formulating, implementing, and
executing public relations strategies.
Hallmark will spend a minimum of fifteen days per quarter on the above
services. At no time will Hallmark provide services which would require Hallmark
to be registered or licensed with any federal or state regulatory body or
self-regulating agency.
2. In connection with Hallmark's activities on SheerVision's behalf, Hallmark
will familiarize itself with the business, operations, properties, financial
condition, and prospects of SheerVision. The retention by SheerVision of
Hallmark as business advisor as heretofore described shall be, except as
otherwise provided herein, for a period of two years from the date hereof,
subject to automatic extension for an additional period of one year unless
either party hereto shall deliver notice to the contrary to the other in
accordance with this Agreement within 60 days of the end of such initial two
year term.
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HALLMARK
CAPITAL
3. In connection with Hallmark's activities on SheerVision's behalf,
SheerVision will cooperate with Hallmark and will furnish Hallmark with all
information and data concerning SheerVision (the "INFORMATION") which Hallmark
deems appropriate and will provide Hallmark with access to SheerVision's
managers, members, officers, directors, employees, independent accountants,
legal counsel, consultants, and representatives. SheerVision represents and
warrants that all Information made available to Hallmark by SheerVision will, at
all times during the period of engagement of Hallmark hereunder, be complete and
correct in all material respects and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading in the light of
the circumstances under which such statements are made. SheerVision further
represents and warrants that any projections provided by it to Hallmark 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.
SheerVision acknowledges and agrees that, in rendering its services hereunder,
Hallmark will be using and relying on the Information without independent
verification thereof by Hallmark or independent appraisal by Hallmark of any of
SheerVision's assets. Hallmark does not assume responsibility for any
information regarding SheerVision. Any advice rendered by Hallmark pursuant to
this Agreement may not be disclosed publicly without Hallmark's prior written
consent.
4. In consideration of its services pursuant to this Agreement, Hallmark
shall be entitled to receive, and SheerVision agrees to pay Hallmark, the
following compensation:
(a) warrants to acquire 50,000 shares of common stock of SheerVision.
Such warrants shall be exercisable at a price per share equal to
$2.70 for a period of five years commencing on the date hereof and
shall be on the same terms and conditions, including anti-dilution
and registration rights, as the warrants granted by SheerVision to
Northeast Securities Corp. ("NESC") in connection with the private
offering conducted by SheerVision through NESC which consummated its
initial closing on September 13, 2005.
(b) consulting fee of $25,000 per calendar quarter for eight quarters
commencing on September 30, 2005, payable in advance of each
quarter, provided, however, (i) that if the revenues in any two
consecutive quarters should equal or exceed $1,500,000, such
consulting fee shall be increased to $50,000 per quarter retroactive
for those two quarters, and (ii) that if the revenues for the
calendar year 2006 equal or exceed $6,000,000, Hallmark shall
immediately receive a one-time cash payment so as to cause the
amount paid thereto hereunder to equal $50,000 per quarter
retroactive to the beginning of calendar year 2006.
5. In addition to the fees described in Paragraph 4 above, SheerVision agrees
to promptly reimburse Hallmark for expenses incurred in connection with its
retention hereunder when incurred or promptly thereafter. SheerVision agrees
that in the event that Hallmark or any employee, agent, or representative of
Hallmark shall be requested to travel outside of the continental United States,
SheerVision shall prepay for such travel arrangements and such flights shall
include "Business Class" seating on recognized and licensed air carriers.
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HALLMARK
CAPITAL
6. SheerVision agrees to indemnify Hallmark in accordance with the
indemnification provisions (the "INDEMNIFICATION PROVISIONS") attached to this
Agreement as Annex A, which Indemnification Provisions are incorporated herein
and made a part hereof.
7. (a) The parties agree that, until the date which is the second anniversary
of the termination of this Agreement, SheerVision shall not, and shall not
permit any affiliate to, enter into any business or other relationship with any
entity or entities introduced to SheerVision directly or indirectly by Hallmark
without the prior written consent of Hallmark. This provision shall survive the
termination of this Agreement.
(b) SheerVision agrees that, subject to applicable law, it shall not
publicly disclose the name of Hallmark or issue or permit any third party to
issue any press release which includes the name of Hallmark or any employee
thereof, or any information relating to the compensation of Hallmark of any
employee thereof, without the prior written consent of Hallmark.
8. Hallmark may terminate this Agreement at any time upon 30 days' prior
written notice, without liability or continuing obligation, except as set forth
in the following sentence. Neither termination of this Agreement nor completion
of the assignment contemplated hereby shall affect: (i) any compensation earned
by Hallmark up to the date of termination or completion, as the case may be,
including the entirety of the compensation referenced in Paragraph 4 hereof;
(ii) the reimbursement of expenses incurred by Hallmark up to the date of
termination or completion, as the case may be, (iii) the provisions of
Paragraphs 3 through 7 of this Agreement and (iv) the Indemnification Provisions
attached as Annex A hereto which are incorporated herein, all of which shall
remain operative and in full force and effect.
9. The validity and interpretation of this Agreement shall be governed by the
law of the State of New York applicable to agreements made and to be fully
performed therein. SheerVision irrevocably submits to the jurisdiction of any
court of the State of New York or the United States District Court for the
Southern District of the State of New York for the purpose of any suit, action,
or other proceeding arising out of, or relating to, this Agreement, or any of
the agreements or transactions contemplated hereby, which is brought by or
against SheerVision and (i) hereby irrevocably agrees that all claims in respect
of any such suit, action, or proceeding may be heard and determined in any such
court and (ii) to the extent that SheerVision has acquired, or hereafter may
acquire, any immunity from jurisdiction of any such court or from any legal
process therein, SheerVision hereby waives, to the fullest extent permitted by
law, such immunity. SheerVision hereby waives, and agrees not to assert in any
such suit, action, or proceeding, in each case, to the fullest extent permitted
by applicable law, any claim that (a) SheerVision is not personally subject to
the jurisdiction of any such court, (b) SheerVision is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution, or otherwise) with respect to
SheerVision's property or (c) any such suit, action, or proceeding is brought in
an inconvenient forum.
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HALLMARK
CAPITAL
10. 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 representatives, and the obligations and
liabilities assumed in this Agreement by the parties hereto shall be binding
upon their respective successors and assigns.
11. For the convenience of the parties hereto, any number of counterparts of
this Agreement may be executed by the parties hereto. Each such counterpart
shall be, and shall be deemed to be, an original instrument, but all such
counterparts taken together shall constitute one and the same Agreement. This
Agreement may not be modified or amended except in writing signed by the parties
hereto.
If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us at the
address set forth above.
Very truly yours,
HALLMARK CAPITAL CORP.
By: /s/ Patricia M. Hall
------------------------
Patricia M. Hall
Managing Director
Confirmed and Agreed to:
As of 1 day of October, 2005
/s/ Suzanne Lewsadder
----------------------------------------
Suzanne Lewsadder
Chief Executive Officer
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HALLMARK
CAPITAL
ANNEX A
INDEMNIFICATION PROVISIONS
SheerVision, Inc. ("SHEERVISION") agrees to indemnify and hold harmless
Hallmark Capital Corp. ("HALLMARK") against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses, and
disbursements (and any and all actions, suits, proceedings, and investigations
in respect thereof and any and all legal and other costs, expenses, and
disbursements in giving testimony or furnishing documents in response to a
subpoena or otherwise), including, without limitation the costs, expenses, and
disbursements, as and when incurred, of investigating, preparing, or defending
any such action, suit, proceeding, or investigation (whether or not in
connection with litigation in which Hallmark is a party), directly or
indirectly, caused by, relating to, based upon, arising out of, or in connection
with Hallmark's acting for SheerVision, including, without limitation, any act
or omission by Hallmark in connection with its acceptance of or the performance
or non-performance of its obligations under the letter agreement dated September
15, 2005, between Hallmark and SheerVision, as it may be amended from time to
time (the "AGREEMENT"); provided, however, such indemnity agreement shall not
apply to any portion of any such loss, claim, damage, obligation, penalty,
judgment, award, liability, cost, expense, or disbursement to the extent it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have resulted primarily and directly from the willful
misconduct of Hallmark. SheerVision also agrees that Hallmark shall not have any
liability (whether direct or indirect, in contract or tort or otherwise) to
SheerVision for or in connection with the engagement of Hallmark, except to the
extent that any such liability is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from Hallmark's willful misconduct.
These Indemnification Provisions shall be in addition to any liability
which SheerVision may otherwise have to Hallmark or the persons indemnified
below in this sentence and shall extend to the following: Hallmark, its
affiliated entities, directors, officers, employees, legal counsel, agents, and
controlling persons (within the meaning of the federal securities laws). All
references to Hallmark in these Indemnification Provisions shall be understood
to include any and all of the foregoing.
If any action, suit, proceeding, or investigation is commenced, as to
which Hallmark proposes to demand indemnification, it shall notify SheerVision
with reasonable promptness; provided, however, that any failure by Hallmark to
notify SheerVision shall not relieve SheerVision from its obligations hereunder.
Hallmark shall have the right to retain counsel of its own choice to represent
it, and SheerVision shall pay the fees, expenses, and disbursements of such
counsel; and such counsel shall, to extent consistent with its professional
responsibilities, cooperate with SheerVision and any counsel designated by
SheerVision. SheerVision shall be liable for any settlement of any claim against
Hallmark made with SheerVision's written consent, which consent shall not be
unreasonably withheld. SheerVision shall not, without the prior written consent
of Hallmark, settle or compromise any claim, or permit a default or consent to
the entry of any judgment in respect thereof, unless such settlement,
compromise, or consent includes, as an unconditional term thereof, the giving by
the claimant to Hallmark of an unconditional release from all liability in
respect of such claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made, but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then SheerVision, on the one hand, and Hallmark, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses, and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by
SheerVision, on the one hand, and Hallmark, on the other hand, and also the
relative fault of SheerVision, on the one hand, and Hallmark on the other hand,
in connection with the statements, acts, or omissions which resulted in such
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses, or disbursements and the relevant equitable considerations
shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation. Notwithstanding the
foregoing, Hallmark shall not be obligated to contribute any amount hereunder
that exceeds the amount of fees previously received by Hallmark pursuant to the
Agreement.
Neither termination nor completion of the engagement of Hallmark referred
to above shall affect these Indemnification Provisions which shall then remain
operative and in full force and effect.
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