ENGAGEMENT AGREEMENT
This Agreement is effective (the "Effective Date") as of the date of execution,
by and between U.S. Wireless Data Inc.. 0000 Xxxxxxx Xxxxxx, Xxxx Xxxxxx,
Xxxxxxxxxx 00000 (referred to as "Company"), and entrenet Group, LLC, 0000 Xx
Xxxxxxx Xxxxxxx. Xxxxx X, Xxxxx Xxxx, Xxxxxxxxxx 00000 (referred to as
"entrenet').
In this Agreement, the party who is contracting to receive services shall be
referred to as "Company," and the party who will be providing the services shall
be referred to as "entrenet".
Company desires to have services provided by entrenet.
Therefore, the parties agree as follows:
1 . DESCRIPTION OF SERVICES. Beginning on the Effective Date, entrenet will
provide the services, (collectively, the "Services") as described in
Exhibit A attached hereto and incorporated herein by reference.
2. PERFORMANCE OF SERVICES. The manner in which the Services are to be
performed and the specific hours to be worked by entrenet shall be
determined by entrenet. entrenet shall, and the Company will rely on
entrenet's promise to work as many hours as may be reasonably necessary to
fulfill entrenet's obligations under this Agreement.
3. PAYMENT. Company will pay a fee to entrenet for the Services in an amount
and under terms and conditions as described in Exhibit A.
4. TRANSACTION. For purposes of this agreement, the term "Transaction' shall
mean, whether in one or a series of transactions: Any capital financing,
including without limitation, any financing for debt, equity, capital
stock (common or preferred), convertible instruments, lines of credit and
secured and/or unsecured debt; Any merger/acquisition activity including
without limitation, (i) the acquisition, directly or indirectly, through
purchases, sales, or otherwise, of any or all portions of the securities
of the Company by an investor or
(ii) any merger, consolidation, reorganization, recapitalization,
restructuring or other business combination involving the Company and an
investor.
5 . CONSIDERATION. For purposes of this agreement, the term
"Consideration' means the total proceeds and other consideration paid
and to be paid or contributed directly or indirectly, in connection
with a Transaction (which consideration shall be deemed to include
amounts paid or to be paid into escrow) to the Company and its
shareholders, including, without limitation: (i) cash; (ii) notes,
securities, and other property (including all options, warrants or
other instruments or arrangements convertible into or exercisable for
any of the
foregoing) at the fair market value thereof, (iii) liabilities assumed;
(iv) payments to be made in installments-. (v) amounts paid or payable
under management, consulting, supply, service, distribution, technology
transfer or licensing agreements, and real property or eqipment lease
agreements, and agreements not to compete, and other similar arrangements
(including such payments to management), entered into other than in the
ordinary course of business; and (vi) contingent payments (whether or not
related to future earnings or operations). The fair market value of
non-cash consideration consisting of securities shall be determined based
upon (A) the closing sale price for such securities on the registered
national securities exchange providing the primary market therein on the
last trading day prior to the date of receipt thereof by the Company or
its shareholders. (B) if such securities are not so traded, the average of
the closing bid and asked prices, as reported by the National Association
of Securities Dealers Automated Quotation System on the last trading day
prior to the date of receipt thereof by the Company or its shareholders,
or (C) if such securities are not so traded or reported, agreement between
the Company and entrenet. The fair market value of any non-cash
Consideration other than securities shall be determined by agreement of
the Company and entrenet. If all or any portion of the Consideration is to
be paid over time, then that portion of the Transaction Fee attributable
thereto shall be payable, in the sole discretion of entrenet, either (i)
as and when such payments are made or (ii) upon consummation of a
Transaction, calculated based on the present value of such Consideration
utilizing a discount rate of 71/o per annum.
6. ACCOUNTING AND INSPECTION RIGHTS. For all compensation referred to in
Exhibit A, it is further agreed that Company shall maintain written records
in sufficient detail for purposes of determining the amount of Fees due
entrenet. Company shall provide to entrenet a written accounting that sets
forth the manner in which Fee payments were calculated. Upon 15 days
notice, entrenet or entrenet's agent shall have the right to inspect
Company's records for the limited purpose of verifying the calculation of
Fee payments, subject to such restrictions as Company may reasonably impose
to protect the confidentiality of the records. Such inspections shall be
made at the company's principal place of business during regular business
hours as may be set by the Company.
7. EXPENSE REIMBURSEMENT. entrenet shall be entitled to reimbursement from
Company for the following "out-of-pocket" expenses: travel expenses,
airfare, hotel, meals, postage and delivery, copying, long-distance
telephone calls, or other expenses as shall be mutually agreed upon.
8. TERM/TERMINATION. This Agreement shall be effective upon signing and shall
have an initial term and such renewal terms as shall be described in
Exhibit A- The termination of this engagement is also defined in Exhibit
A.
9. RELATIONSHIP OF PARTIES. It is understood by the parties that entrenet is
an independent contractor with respect to Company, and not an employee of
Company. Company will not provide fringe benefits, such as health
insurance benefits, paid vacation, or any other employee benefit, for the
benefit of entrenet.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) If, in connection with the services or matters that are the subject of this
agreement, entrenet becomes involved in any capacity in any action or legal
proceeding, the Company agrees to reimburse entrenet, its affiliates and
their respective directors, officers, employees, representatives and
controlling persons (each an "Indemnified Person') promptly upon request
for all expenses (including without limitation, fees and disbursements of
legal counsel and the cost of investigation and preparation) as they are
incurred. In the event a determination is made to the effect set forth
below holding that entrenet is not entitled to indemnification hereunder,
entrenet shall promptly refund to the Company all amounts advanced under
this Section in respect of reimbursement of expenses. The Company also
agrees to indemnify and hold each Indemnified Person harmless against all
losses, claims damages or liabilities, joint or several (collectively,
"Damages"), to which such Indemnified Person may become subject
(i) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any offering
materials or any other written or oral communication provided to any
investor of securities of the Company or arising out of or based upon
the omission or alleged omission to state in any such document or
communication a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or
(ii) in connection with the services or matters which arc the subject
of this agreement, provided that the Company shall not be liable under
the foregoing indemnity in respect of any Damages to the extent that a
court having jurisdiction shall have determined by a final judgment
(not subject to further appeal) that such damages resulted directly
and primarily from the gross negligence or willful misconduct of
entrenet or any other Indemnified Person. The Company also agrees that
no Indemnified Person shall have any liability to the Company for or
in connection with this engagement, except for any liability which
results directly and primarily from the gross negligence or willful
misconduct of the Indemnified Person.
(b) The Company and entrenet agree that if, for any reason, any
indemnification sought pursuant to this Section is unavailable or is
insufficient to hold any Indemnified Person harmless, then, whether or not
entrenet is the person entitled to indemnification, the Company and
entrenet shall each contribute to amounts paid or payable in respect of the
Damages for which such indemnification is unavailable or insufficient in
such proportion as if appropriate to reflect
(i) the relative benefits to the Company, on the one hand. and
entrenet, on the other and
(ii) their relative fault, in connection with the matters as to which
such Damages relate, as well as any relevant equitable considerations;
provided that in no event shall the amount to be contributed by
entrenet exceed the amount of fees actually received by entrenet
hereunder (excluding any amounts received by entrenet as a
reimbursement of expenses). The Company and entrenet agree to consult
in advance with one another with respect to the terms of any proposed
waiver, release or
Engagement
Agreement
action or proceeding to which entrenet or an indemnified Person may be
subject as a result of the matters contemplated by this agreement and
further agree not to enter into any such waiver, release or settlement
without the prior written consent of one another (which consent shall
not be unreasonably withheld), unless such waiver, release or
settlement includes an unconditional release of entrenet or such
indemnified Person, as the case may be, from all liability arising out
of such claim, action or proceeding.
(c) The agreements of the Company under this Section shall be in addition to
any liabilities the Company may otherwise have and shall apply whether or
not entrenet or any other Indemnified Person is a formal party to any claim
action or legal proceedings. ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO
ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ]HEREUNDER OR IN RESPECT OF
ANY CLAIM ACTION OR LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THE
SERVICES OF entrenet HEREUNDER OR IN ANY OTHER MANNER IS ]HEREBY WAIVED BY
EACH INDEMNIFIED AND BY THE COMPANY.
D PARTY
11.
COOPERATION, CONFIDENTIALITY, ETC.
(a) The Company shall furnish entrenet with all information and data which
entrenet shall reasonably deem appropriate in connection with its
activities on the Company, s behalf, and shall provide entrenet full access
to the Company's officers, directors, employees and professional advisors.
The Company recognizes and confirms that entrenet in acting t to this
engagement will be using information m public reports and other information
provided by others, including information provided by the Company, and that
entrenet does not assume responsibility for, and may rely without
independent verification upon, the accuracy or completeness of any such
information.
(b) the Company agrees that entrenet's advice is for the use
and information of the Company's management and Board of Directors only and
the Company will not disclose such advice to others (except the Company's
professional advisors and except as required by law) or summarize or refer
to such advice without, in each case, entrenet's prior written consent.
Notwithstanding anything to the contrary contained in the foregoing, in the
event the Company is required by law to make any filings with any
governmental authority (including without limitation the Securities and
Exchange Commission) which mention entrenet or any disclosure to the holder
of its securities concerning entrenet, the Company shall afford entrenet
the opportunity to review such disclosure in advance and to approve the
form thereof, such approval not to be unreasonably withheld or delayed.
entrenet agrees that it will not. without the prior written consent of the
Company, disclose, to any third party any confidential information provided
by the Company to entrenet in connection with this engagement, except to
the extent
(i) such disclosure is required by applicable law, regulation or legal
process,
(ii) such information becomes publicly known other than as a remit of
the breach by entrenet of its obligations set forth in this sentence,
and
(iii) such disclosure is requested or required by any bank regulatory
authority having jurisdiction over entrenet.
12, OTHER TRANSACTIONS. The Company acknowledges that entrenet and its
affiliates may have and may in the future have investment and commercial
banking, trust and other relationships with parties other than the Company,
which parties may have interests with respect to a Transaction. Although
entrenet in the course of such other relationships may acquire information
about the Transaction, potential investors or such other parties, entrenet
shall have no obligation to disclose such information to the Company or to use
such information on the Company's behalf. Furthemore, the Company acknowledges
that entrenet may have fiduciary or other relationships whereby entrenet may
exercise voting power over royalties of various persons, which securities may
from time to time include securities of the Company, potential investors or to
others with interests with respect to a Transaction. The Company acknowledges
that entrenet may exercise such powers and otherwise perform its functions in
connection with such fiduciary or other relationships without regard to its
relationship to the Company hereunder.
13. ACKNOWLEDGMENT OF SERVICES PROVIDED. entrenet may include descriptions
of services provided by entrenet to the Company in entrenet's
promotional materials. The Company may not otherwise be publicly
referred to by entrenet without Company's prior consent.
14. NOTICES. All notices required or permitted under this Agreement shall be
in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, fire class postage prepaid,
addressed as follows:
IF for- Company:
U.S. Wireless Data Inc.
Xxx Xxxxxxxxx
President & CEO
0000 Xxxxxxx Xxxxxx
xxxx Xxxxxx, Xxxxxxxxxx 00000
IF for entrenet:
entrenet Group, LLC
Xxxxxxx X. Xxxxxx
Chief Financial Officer
0000 Xx Xxxxxxx xxxxxxx, Xxxxx X Xxxxx Xxxx, XX 00000
Such addresses may be changed from time to time by either party by
providing written notice to the other m the manner set forth above.
15. ARBITRATION AND CONSENT TO JURISDICTION. Any dispute and/or
controversy relating to or arising from the interpretation and/or
application of this Agreement shall be submitted at the request of the
Company or entrenet to a neutral arbitrator selected by the parties
from the J.A.M.S/Endispute panel Of arbitrators for a determination
which shall be @ and binding as to the parties thereto. Arbitration
shall take place in Santa Xxxx, located in the county of Sonoma, state
of California for a determination which shall be final and binding as
to the parties thereto. The decision and award of the arbitrator may
include the cost of the arbitration proceedings and may include
reasonable attorney fees for the successful party. The arbitration
shall be conducted in accordance with California Arbitration Act (CCP
Section 1280 et seq.) and not by court action except as provided by
California law for the judicial review of arbitration proceedings.
Nothing herein contained shall be deemed to affect the rights of any @
to serve process in any manner other than as permitted by law.
16. ENTIRE AGREEMENT. This Agreement, along with any Exhibits attached
hereto, contains the entire agreement of the parties with respect to
the subject matter and supersedes any other agreement whether oral or
written which are not fully expressed herein, except for carryover
provisions of any previous executed agreements between entrenet and
Company.
17. AMENDMENT. This Agreement may be modified or amended if the amendment
is made in writing and is signed by both parties.
18. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason. the remaining provisions shall
continue to be valid and enforceable. If a court finds that any
provision of this Agreement is invalid or unenforceable, but that by
limiting such provision it would become valid and enforceable, then
such provision shall be deemed to be written, construed, and enforced
as so limited.
19. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel
strict compliance with every provision of this Agreement.
20. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of California, excluding that body of law known as conflict of
laws.
Engagement Agreement
Exhibit A
SERVICES PROVIDED BY entrenet
ADVISORY SERVICES. entrenet will act as corporate advisor in providing
services to the management of the Company. Services shall include advice
and counsel in the following areas:
1. Business Plan and Corporate presentation
2. Administrative Systems and Controls
3. Sales and Marketing Strategy and Structure
DIRECT INTRODUCTION OF FINANCING SOURCES. entrenet will use its best
efforts to provide introduction to financing sources for the Company.
OTHER SERVICES. entrenet may provide additional direct consulting services
to the Company beyond its role as corporate advisor (egs. financing
strategies, strategic partnerships, acquisition and merger strategies,
securing placement agents, corporate positioning, option for and
participation in financial meetings ("road show")) at the Company's
request. Such additional direct consulting services would be charged at
entrenet, s prevailing consulting rates at the time of the assignment(s) or
as agreed to separately in the future.
entrenet COMPENSATION.
Advisory Service & At signing of this engagement agreement, entrenet shall
earn compensation of $150,000 for a one-year term. Form of payment shall
be one hundred percent (1000/o) payable in a 10% Convertible Debenture.
The form of which is attached as Exhibit B except that the conversion
price shall be fixed at $0.50 per share for a total of 300,000 shares for
the engagement and the Debenture shall not be transferable. Payments due
entrenet upon completion of each the following milestones:
1. Business Plan and Corporate presentation:
* Summary Business Plan - Due 6/15/97 $15,000
* Complete Business Plan - Due 6/19/97 $20,000
* Corporate Presentation - Due 6/24/97 $15,000
2. Administrative Systems and Controls $70,000
* Needs analysis - Due 8/l/97
+ Staffing Requirement-Due 8/l/97
M 15 + RFP Preparation - Due 8/l/97
+ Corporate vs. Regional staffing requirements - Due 8/l/97
* Interim staffing requirements - Due 8/l/97
Systems installation, training and vendor oversight -
On going on an agreed upon mutually agreed upon
schedule
3. Sales and marketing strategy Consultation - All due
S/l/97 $30,000 + Strategy review, analysis, and
recommendations + Reporting command & control,
structure, review, analysis, and recommendations +
Sales/Management recruiting
Engagement
Agreement
Direct introduction of Financing sources In addition to fees for successful
Transactions and advisory services, entrenet's fees for direct introduction
of a financing source or referral of principal parties, shall be eight
percent (80/o) of the gross consideration provided by such source.
Warrants. For all successful Direct Introduction of Financing Sources,
the Company shall grant to entrenet a five-year warrant to purchase
shares of Company's stock equal to the value of all fees paid to
entrenet in conjunction with all such transactions. These warrants
shall contain all standard provisions, as well as stock split
adjustments and piggy-back registration provisions, and shall have an
exercise price equal to the lower of market or the purchase price of
the stock issued in conjunction with any such transaction.
Reimbursement of Expenses. Entrenet shall be entitled to expense
reimbursement for all pre-approved travel and business expenses as described
in paragraph 7 of this agreement. Additionally, to offset local auto travel.
long-distance telephone calls, postage, delivery, copying, faxing and other
office costs, entrenet shall be advanced a non-accountable $3000 for the
one-year term. Form of payment shall be $750 payable in cash upon signing of
this agreement. The balance of shall be paid quarterly in the amount of $750
on September 1, 1997, December 1, 1997, and March 1, 1998.
TERM
----
The term of the Agreement shall be one (1) year from date of signing.
Upon termination of this Agreement, payments under this paragraph shall
cease; provided, however, that entrenet shall be entitled to payments for
periods or partial periods that occurred prior to the date of termination
and for which entrenet has not yet been paid.
