EXHIBIT 4.2
AMENDED ENGAGEMENT AGREEMENT
This document, dated July 31, 2002, shall serve as an AMENDMENT to the
ENGAGEMENT AGREEMENT ("Agreement") entered into as of the 7th day of March 2002,
by and between US Data Authority, Inc., a Florida corporation (the "Company"),
and US DATA International Development, Inc., a Florida corporation at the
address set forth in Section 9 below (the "USD International").
RECITALS
A. The Company desires to engage USD International, and USD International
desires to be engaged by the Company, on the terms and conditions set forth in
this Agreement, from and after March 7th, 2002 (the "Effective Date").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:
1. Engagement Agreement. On the terms and conditions set forth in this
Agreement, the Company agrees to engage the USD International and the USD
International agrees to be engaged by the Company for the Engagement Period set
forth in Section 2 hereof and in the position and with the duties set forth in
Section 3 hereof. Capitalized terms used in this Agreement not otherwise defined
in this Agreement are defined in Section 19 below.
2. Term. The initial term of Engagement under this Agreement shall be for
a three-year period commencing on the Effective Date (the "Initial Term"). The
term of Engagement shall be automatically renewed for an additional consecutive
12-month period (the "Extended Term") as of the third and every subsequent
anniversary of the Effective Date, unless and until either party provides
written notice to the other party in accordance with Section 9 hereof not less
than 90 days before such anniversary date that such party is terminating the
term of Engagement under this Agreement ("Non-Renewal"), which termination shall
be effective as of the end of such Initial Term or Extended Term, as the case
may be, or until such term of Engagement is otherwise sooner terminated as
hereinafter set forth. Such Initial Term and all such Extended Terms are
collectively referred to herein as the "Engagement Period." A notice of
Non-Renewal given by either party to this Agreement shall not be deemed a
termination of the USD International's Engagement for purposes of Section 8 of
this Agreement.
3. Responsibilities and Duties. The USD International shall:
A. provide all international marketing and sales coordination of the
Company's products and services, buying said services at a Wholesale rate to be
mutually agreed upon and sold by USD International subsidiaries at a Retail rate
to be determined;
B. negotiate the acquisition of and/or licensing of technologies whose
utilization will enhance the Company's products and services in the areas of
data transmission, retrieval and storage.
C. Through its direct efforts, the USD International will account for at
least eighty percent (80%) of the projected new sales of the Company.
D. will oversee sales and marketing worldwide through a network of USD
International sales subsidiaries who will sell Company products and services
exclusively, and;
E. will assist the Company in securing any additional funding needed for
future projects or support of growth.
The USD International shall also perform such other duties with the Company and
with any Subsidiary as the Company Board of Directors may from time to time
reasonably determine and assign to the USD International. The USD International
shall devote the USD International's reasonable best efforts and substantially
full business time to the performance of the USD International's duties and the
advancement of the business and affairs of the Company.
4. Place of Performance. In connection with the USD International's
Engagement by the Company, the USD International shall establish offices where
required. The USD International home office shall be in Miami, Florida, with
anticipated representative offices in: Athens, Greece; Madrid, Spain; Paris,
France; Dublin, Ireland; Santo Xxxxxxx, Dominican Republic; Panama City, Panama;
and San Xxxx Puerto Rico.
5. Compensation and Benefits; Stock Option.
(a) Base Retainer/Fee. During the Engagement Period, and provided
the Company receive funding from an investment group (the "Investors") who have
pledged equity investment of up to $8.9 million equity investment, amended and
agreed dated 8/01/2002, the Company shall pay to the USD International the
following annual base retainer/fee (the "Fee": (a) for the period from the
Effective Date to March 7, 2005, the Fee shall be an annual rate to be
determined by the approved marketing budget of the Company, with USDI receiving
a minimum of ten percent (10%) of the paid in monthly equity installments; and a
maximum of that budget directed by Management as the monthly budget for
worldwide marketing needs (b) for the period from the Effective Date to March 7,
2005, the USD International shall also receive an amount equal to ten percent
(10%) of the Company's new profit, and (c) the USD International shall be
reimbursed for all pre-approved production and marketing expenses expended in
the promotion of the Company's goods and services worldwide.
(b) Restricted Stock Grant. Upon the execution of this Agreement,
the Company and the USD International shall enter into a restricted stock grant
agreement to which the Company will grant the USD International 1,000,000 shares
of the Company's Common Stock, par value $0.02 per share (the "Stock").
(c) Stock Options. Upon execution of this Agreement, the Company
shall grant options to the USD International in accordance with the terms of the
Company's stock option plans all exercisable at a price of fifty percent (50%)
of the market "bid" price per share as follows: (i) options for 1,000,000 shares
will be granted exercisable beginning three (3) months from the Effective Date;
(ii) options for 1,000,000 shares will be granted exercisable beginning six (6)
months from the Effective Date; and (iii) options for 1,000,000 shares will be
granted exercisable beginning when and if USDA achieves positive EBITDA for a
consecutive three-month period. All of the options shall vest immediately upon
the date they become exercisable shall be exercisable for a period of five (5)
years. In the event USDA is sold or acquired by another corporation, whether by
merger, sale of all or substantially all of the assets or share exchange, (a
"Sale of the Company") then to the extent any of the grants set forth in the
preceding subparagraphs have not become exercisable, they shall become
immediately exercisable as of the date of the Sale of the Company and with
respect to the options described in subsection (iii) above without regard to
whether or not the condition set forth in that subsection has been met.
(g) Withholding Taxes and Other Deductions. To the extent required
by law, the Company shall treat USD International as an Independent Contractor
and, as such would instruct USD International to pay its own applicable federal,
state or local taxes and such other deductions as are prescribed by law.
6. Expenses. The USD International is expected and is authorized to incur
reasonable expenses in the performance of their duties under this Agreement. The
Company shall reimburse the USD International for all such expenses promptly
upon periodic presentation by the USD International of an itemized account,
including reasonable substantiation, of such expenses. All expenses over $5,000
shall be approved by the USD International Committee of the Board.
7. Confidentiality, Non-Disclosure and Non-Competition Agreement. The
Company and the USD International shall enter into a Confidentiality,
Non-Disclosure and Non-Competition Agreement (the "Related Agreement"), in the
form of Exhibit B to this Agreement.
8. Termination of Engagement.
(a) Permitted Terminations. The USD International's Engagement
hereunder may be terminated during the Engagement Period under the following
circumstances:
(i) By the Company. The Company may terminate the USD
International's Engagement:
(B) For Cause;
(ii) By the USD International. The USD International may
terminate their Engagement for Reasonable Cause, as defined in Section 19(k)
herein.
(b) Termination. Any termination of the USD International's
Engagement by the Company or the USD International (other than because of the
USD International's death) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon,
if any, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the USD International's Engagement
under the provision so indicated. Termination of the USD International's
Engagement shall take effect on the Date of Termination.
9. Notices. All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy or telex, addressed as follows:
(i) If to the Company:
US Data Authority, Inc.
0000 X.X. Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Fax: 000-000-0000
(ii) If to the USD International:
US DATA International Development, Inc.
Gables International Plaza
0000 Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent, mailed, telecopied or telexed in the manner described above, or which
shall be delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
10. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
11. Survival. It is the express intention and agreement of the parties
hereto that the provisions of Sections 8, 9, 10, 12, 16 and 19 hereof and this
Section 11 shall survive the termination of Engagement of the USD International.
In addition, all obligations of the Company to make payments hereunder shall
survive any termination of this Agreement on the terms and conditions set forth
herein.
12. Assignment. The rights and obligations of the parties to this
Agreement shall not be assignable or delegable, except that (i) in the event of
the USD International's death, the personal representative or legatees or
distributees of the USD International's estate, as the case may be, shall have
the right to receive any amount owing and unpaid to the USD International
hereunder and (ii) the rights and obligations of the Company hereunder shall be
assignable and delegable in connection with any subsequent merger,
consolidation, sale of all or substantially all of the assets or stock of the
Company or similar transaction involving the Company or a successor corporation.
The Company shall require any successor to the Company to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
13. Binding Effect. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.
14. Amendment; Waiver. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
15. Headings. Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
16. Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including any choice of law rule thereof that would cause the laws of another
jurisdiction to apply).
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties respecting the Engagement of the USD International, there
being no representations, warranties or commitments except as set forth herein.
18. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be an original and all of which shall be deemed to constitute one
and the same instrument.
19. Definitions.
(a) "Agreement" means this Engagement Agreement.
(b) "Base Fee" is defined in Section 5(a) above.
(c) "Board" means the board of directors of the Company.
(d) "Cause" means
(i) the conviction of a felony or a crime involving moral
turpitude (excluding a traffic violation not involving any period of
incarceration) or the willful commission of any other act or omission involving
dishonesty or fraud with respect to, and materially adversely affecting the
business affairs of, the Company or any of its Subsidiaries or any of their
customers or suppliers;
(ii) conduct tending to bring the Company or any of its
Subsidiaries into substantial public disgrace or disrepute that causes
substantial and material injury to the business and operations of the Company or
such Subsidiary;
(iii) substantial and repeated failure to perform duties of
the office held by the USD International as reasonably directed by the Board
(other than any such failure resulting from the USD International's incapacity
due to injury or illness), and such failure is not cured within 30 days after
the USD International receives written notice thereof from the Board that
specifically identifies the manner in which the Company believes the USD
International has not substantially performed their duties;
(iv) gross negligence or willful misconduct with respect to
the Company or any of its Subsidiaries that causes substantial and material
injury to the business and operations of the Company or such Subsidiary;
(v) any material breach of the Related Agreement.
For purposes of this definition, no act or failure to act, on
the part of the USD International, shall be considered "willful" unless it is
done, or omitted to be done, by the USD International in bad faith or without
reasonable belief that the USD International's action or omission was in the
best interests of the Company; and any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the USD International in good faith and in the best
interests of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Company" means US Data Authority, Inc. and its successors and
assigns.
(g) "Date of Termination" means
(i) if the USD International's Engagement is terminated
because of the USD International's disability pursuant to Section 8(a)(ii)(A)
hereof, 30 days after Notice of Termination, provided that the USD International
shall not have returned to the performance of the USD International's duties on
a full-time basis during such 30-day period; or
(ii) if the USD International's Engagement is terminated by
the Company for Cause pursuant to Section 8(a)(ii)(B) hereof or by the USD
International pursuant to Section 8(a)(iii) hereof, the date specified in the
Notice of Termination.
(h) "Effective Date" means March 7, 2002.
(i) "Engagement Period" is defined in Section 2 above.
(j) "USD International" means US DATA International Development,
Inc..
(k) "Reasonable Cause" means
(i) the Company's failure to perform or observe any of the
material terms or provisions of this Agreement, and the continued failure of the
Company to cure such default within 30 days after written demand for performance
has been given to the Company by the USD International, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions;
(ii) a material reduction in the scope of the USD
International's title or duties (including, without limitation, any merger,
consolidation, reorganization, sale of stock or assets, share exchange or other
transaction pursuant to which the Company is sold or acquired by another
corporation, person or entity, and that results in the USD International
reporting to anyone other than the board of directors of the parent corporation
of any controlled group of corporations that includes the Company, if the
Company is not such parent corporation, or any failure of such parent
corporation to engage the USD International as the President/CEO of such parent
corporation) without their written consent;
(iii) the failure of the Company to obtain the assumption of
the Company's obligations under this Agreement by an successor as contemplated
by Section 13 of this Agreement.
(l) "Initial Term" is defined in Section 2 above.
(m) "Non-Renewal" is defined in Section 2 above.
(n) "Notice of Termination" is defined in Section 8(b) above.
(o) "Related Agreement" is defined in Section 7 above.
(p) "Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in
electing the board of directors directly or through one or
more subsidiaries and any partnership, limited liability
company or other entity in which the Company or any subsidiary
owns a controlling interest.
20. Severance Rights in the Event of Termination by USD International for
Certain Reasons. At any time after the USD International has been engaged by the
Company for at least 90 days under this Agreement, in the event that USD
International shall terminate this Agreement for Reasonable Cause as defined in
Paragraphs (k)(ii), (k)(iii) and (k)(iv) of Section 19 herein, USD International
shall be entitled to receive the following:
(a) As severance, an amount equal to the greater of (i) that sum equal to
one year's Base Fees, as defined in Section 5 herein, at the annual rate then in
effect as of the Date of Termination; and (ii) that sum equal to the Base Fee,
as defined in Section 5 herein, which would have been payable to USD
International hereunder (in the absence of the termination of this Agreement by
USD International), from and after the Date of Termination and throughout the
remainder of the Initial Term (in the event that the Date of Termination shall
occur during the Initial Term), or, throughout the remainder of the Extended
Term, (in the event that the Date of Termination shall occur during the Extended
Term), as the case may be;
(b) The right to exercise all stock options granted to USD International
prior to the Date of Termination, and which vested prior to said date;
(c) In the event that (i) the Date of Termination shall occur prior to the
end of the Engagement Period; and (ii) in the absence of the termination of this
Agreement by USD International, USD International, would, pursuant to the terms
of Paragraph 5(d) herein, have had the right to receive grant(s) of stock
options subsequent to the Date of Termination pursuant to the provisions of such
paragraph ("Subsequent Options"), then, notwithstanding the termination of this
Agreement by USD International, USD International shall have the right to
receive a pro-rata portion of the Subsequent Options. Such pro-rata share shall
be determined based on a fraction as follows:
21. Indemnification of Company. The Company hereby indemnifies and agrees
to hold the USD International harmless from and against any and all damage,
loss, liability, claim, cost, expense, action and causes of action (including,
without limitation, reasonable attorneys' fees and disbursements) incurred by or
asserted against the USD International, arising from or in connection with any
claims, liabilities, causes of action incurred or arising prior to the Effective
Date of this Agreement, including, without limitation, any liabilities of USD
International as a responsible person for payroll taxes owing by the Company for
payroll tax liabilities incurred prior to the Effective Date of this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement, or have caused this Agreement to be duly executed and delivered on
their behalf, as of the Effective Date.
US DATA AUTHORITY, INC.
By: /s/Xxxxxxxx X. Xxxxxx
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XXXXXXXX X. XXXXXX
President/CEO
THE USD INTERNATIONAL:
/s/ M. Xxxxx Xxxxx
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US DATA INTERNATIONAL DEVELOPMENT, INC.
Witnessed by:
/s/ Xxxxxx Labareau
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