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EXHIBIT 10.9
May 17, 1996
Xx. Xxxxxxx Xxxxxxxx
Chairman
MSU
526-000 Xxxxx Xxxx
Xxxxxxx Xxxxxx Xxxxxx, Xxxxx
XX0 0XX
Xxxxxxx
Dear Xx. Xxxxxxxx:
This engagement letter (the "Agreement") confirms that MSU (the
"Company") has engaged XxXxxxxxxx International, Inc. ("Consultant") to act as
the Company's consultant and representative with companies and/or persons named
in the attached Exhibit 1 with respect to certain strategic transactions
undertaken by the Company during the next 6 months, and during any extension
thereof by mutual agreement of the parties (the "Engagement Period").
1. Description of Services. During the Engagement Period,
Consultant will perform such of the following services as the Company may
reasonably request:
(a) Consultant will familiarize itself to the extent it deems
appropriate and feasible with the business, operations, properties, financial
condition, prospects and plans of the Company.
(b) Consultant shall endeavor to introduce the Company to one or
more companies and/or persons, named in the attached Exhibit 1, capable of
forming strategic transactions and alliances involving the Company's products
or technology (collectively, the "Products"). In the event a strategic
transaction or alliance is consummated with a company(ies) and/or person(s)
named in Exhibit 1, Consultant shall continue to assist the Company in its
dealings with such strategic partner. In particular, Consultant shall act as
intermediary between the Company and the strategic partner, and if any
controversy arises between the Company and the strategic partner, Consultant
shall assist the Company in its efforts to settle such controversy.
2. Compensation for Services. If, during the Engagement Period
or during the 12 month period immediately after termination of the Engagement
Period, the Company has received fees from up-front research and development
payments (including joint venture or collaboration payments), relating to the
Products to be distributed or marketed with a company(ies) and/or person(s)
named in Exhibit 1, the Company shall pay Consultant a fee equal to 7.5% of the
receipt of all such up-front fees. Additionally, if during the Engagement
Period or during the 12 month period immediately after termination of the
Engagement Period, the Company has received monies through an equity placement
by a company(ies) and/or person(s) named
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in Exhibit 1, the Company shall pay Consultant a finders fee equal to 7.5% of
the proceeds received by the Company. In the event the Company receives fees
from up-front research and development payments (including joint venture or
collaboration payments), relating to the Products to be distributed or marketed
with a company(ies) and/or person(s) named in Exhibit 1, that constitutes an
exchange for equity in the Company, then the Consultant shall only be
compensated once with respect to such transaction. Furthermore, if during the
Engagement Period or during the 12 month period immediately after termination
of the Engagement Period, the Company has received Service Provider
revenues/fees (as defined below), relating to Internet access and services with
a company(ies) and/or person(s) named in Exhibit 1, then the Company shall pay
to Consultant a percentage fee of all Service Provider revenues/fees in
connection with such transaction(s). The fee payable to the Consultant by the
Company, whether by shares of stock or revenues/fees (whichever applicable),
shall be expressed as a percentage of the ratio of 5:1 (for every six shares of
stock or six dollars received by the Company, the Company receives five shares
of stock or five dollars and the Consultant receives one share of stock or one
dollar) of the total Service Provider revenue/fees, inclusive in the Company's
percentage fee payable by the company(ies) and/or person(s) named in Exhibit 1.
With respect to fees payable under Service Provider revenues/fees involving a
strategic transaction with a company(ies) and/or person(s) named in Exhibit 1,
the Consultant shall only be compensated with either shares of stock or dollars
(whichever applicable), not both, with respect to such transaction. For
example:
TOTAL
TOTAL SUM VALUE COMPANY'S CONSULTANT'S PERCENTAGE
SERVICE PROVIDER STRATEGIC PARTNER'S PERCENTAGE PERCENTAGE COLLECTED BY
REVENUES/FEES PERCENTAGE SHARE SHARE SHARE COMPANY
100% 76% 20% 4% 24%
100% 65% 25% 5% 35%
100% 64% 30% 6% 36%
100% 62% 35% 7% 42%
100% 52% 40% 8% 48%
Service Provider revenues/fees are defined as the total sum value of access
provider revenues, content provider revenues, and any and all monthly service
revenues/fees associated with such strategic transactions. The Company and
Consultant shall make a best effort to direct Service Provider business, with a
company(ies) and/or person(s) named in Exhibit 1, through the Joint Venture
Corporation created by the Company and American Interactive Media, Inc. (AIM).
Additionally, if during the Engagement Period or during the 12 month period
immediately after termination of the Engagement Period, the Company has
received revenues from chip sales, relating to the Products, EXCLUDING NETBOX,
to be distributed or marketed with a company(ies) and/or person(s) named in
Exhibit 1, the Company shall pay Consultant a fee equal to 5% of the receipt of
all such payments. All of the aforementioned revenues/fees described herein
associated with a company(ies) and/or person(s) named in Exhibit 1, shall be
payable on a monthly basis within the thirty day period following the end of
the month in which the revenues are received by the Company. It is the
intention of the parties that Consultant be compensated
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in the event the Company receives fees and/or revenue as a direct or indirect
consequence of Consultant's efforts. Additionally, all of the aforementioned
revenues/fees are payable to the Consultant for the perpetual life of the
relationship between the Company and a company(ies) and/or person(s) named in
Exhibit 1. Consultant shall not be entitled to compensation from expenses
incurred by the Company for software upgrades, designs, and enhancements paid
for by a company(ies) and/or person(s) named in Exhibit 1. Consultant's
obligation to provide services pursuant to Section 1 is contingent upon timely
payment of the fees described in Section 2. Consultant will have the right to
audit, no more than once per 12-month period, the Company's books and records
to confirm the accuracy of the compensation or fees payable hereunder. The
out-of-pocket expenses of such audit shall be borne by Consultant unless such
audit identifies a discrepancy of at least 5% between the amount actually paid
to Consultant hereunder and the amount which should have been paid hereunder,
in which case the expenses of such audit shall be borne by the Company.
3. Expenses/Retainer. The Company shall pay to Consultant a
non-accountable expense allowance in the amount of $5,000 per month payable
beginning on the first day of the first month following the execution of this
Agreement. The Company understands that this retainer is in addition to any
other retainer covered in other agreements between the Company and Consultant.
4. Share/Option Pool. The Company hereby establishes a
pool of 100,000 shares/options, exercisable at $8.00 per share, exclusively for
awarding performance based results in pursuit of companies and/or persons named
in Exhibit 1. The overseeing and awarding of these shares/options shall be by
committee consisting of the following individuals: Xxxxxxx Xxxxxxxx, Xxxxx
Xxxx, Xxxx Xxxxxxx, and Xxxx XxXxxxxxxx. None of the aforementioned
individuals are eligible to received any portion this pool's shares/options.
Shares/options are to be distributed to individuals who help the Company
achieve objective results with companies and/or persons named in Exhibit 1.
5. Use of Information About the Company.
(a) Consultant is authorized to transmit to copy or copies of any
business plan, forms of agreements and any other documentation supplied to
Consultant expressly for transmission to any of the U.S. contacts by or on
behalf of the Company. Except in connection with its services hereunder,
Consultant shall not make use of the Information and shall keep the Information
confidential except to the extent that: (i) the Information is or becomes
publicly available (otherwise than through disclosure by Consultant), (ii)
disclosure is required by law or requested by any governmental agency or
regulatory body, or (iii) the Information is disclosed to Consultant by a
source other than the Company or its agents.
(b) Confidential information means all unpatented designs,
drawings, data specifications, manufacturing processes, testing procedures and
all other technical business and similar information relating to the Company
and its products including all readable computer or other machine readable data
logic, logic diagrams, flow charts, coding, listings, test data or routines,
diagnostic programs or other material relating to or comprising software or
hardware, together with all patent rights and applications, copyrights and
design rights registerable or otherwise. The Consultant acknowledges that it
will have access to commercially sensitive information of the Company which is
confidential and proprietary to the Company. The Consultant agrees to keep and
to ensure that its personnel shall keep the confidential information and all
other matters arising or
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coming to its attention in connection with the confidential information secret
and confidential and not at any time for any reason whatsoever to disclose it
or permit it to be disclosed to any third party except that is permitted
hereunder to enable the Consultant to carry out its duties and obligations.
6. Conditions of Transaction. Consultant's services to be
performed hereunder are subject to certain conditions, including (i)
satisfactory completion of due diligence by Consultant, (ii) the form and
terms of the strategic partnership being mutually acceptable to the Company and
Consultant, and (iii) the absence of a material adverse change in the
condition of the Company.
7. Indemnification. The Company agrees to indemnify and hold
harmless Consultant and its affiliates, and their directors, employees, and
agents, and their respective successors, legal representatives an assigns
(Consultant and each such person, including their successors, legal
representatives and assigns, being referred to herein as an "Indemnified
Person"), from and against all claims, liabilities, losses and damages related
to or arising out of (i) actions taken or omitted to be taken (including
statements made or omitted to be made in any materials regarding the Company)
by the Company or an affiliate of the Company or a director, employee, agent
or representative thereof (other than an Indemnified Person) or (ii) the breach
of any representation or warranty of the Company contained in the Engagement
Letter; and the Company will reimburse each Indemnified Person for all
expenses (including reasonable attorneys' fees) as they are incurred in
connection with the investigation, preparation, and defense of any such claim
or action, whether or not the Indemnified Person is or is threatened to be a
party thereto. No Indemnified Person shall have any liability to the Company,
or a director, employee, agent or representative thereof in connection with the
services rendered pursuant to the Engagement Letter except for claims,
liabilities, losses, damages and expenses which arise from the Consultant's
failure to fulfill its obligations pursuant to the terms of the Engagement
Letter.
8. Representations and Warranties of the Company. The Company
represents and warrants to Consultant that this Agreement has been duly
authorized, executed and delivered by the Company, does not conflict with any
other agreement to which the Company is a party, and constitutes a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms. The Company represents that, to the best of its
knowledge, the Information (including any offering materials) will not, when
delivered and at the closing of a strategic transaction, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading in light of the circumstances under which
they were made. The Company agrees to advise Consultant promptly of the
occurrence of any event or any other change prior to the closing known to it
which results in the Information containing any untrue statement of a material
fact or omitting to state any material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which they
were made.
9. Termination. The Engagement Period may be terminated by
either party for any reason (prior to the termination of the period set forth
in the introductory paragraph hereof) upon written notice to the other party.
10. Survival of Certain Provisions. The Company's obligations
under Sections 2, 3, 4, and 7, and the Company's representations under Section
8, shall remain in full force and effect and shall not be affected by (i) any
investigation made by or on behalf of Consultant, (ii) consummation of a
strategic partnership, or (iii)
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termination of this Agreement. Mutual obligations of both the Company and the
Consultant under Section 5 shall remain in full force and effect and shall not
be affected by (i) any investigation made by or on behalf of either the Company
or Consultant, or (ii) consummation of a strategic partnership, or (iii)
termination of this Agreement.
11. General. This Agreement may be amended only by the written
agreement of each party hereto. The parties acknowledge and agree that
Consultant is an independent contractor of the Company and is not an affiliate,
partner, joint venturer or agent of the Company. This Agreement may not be
assigned by the Company and may be assigned by Consultant only with prior
written consent of the Company (which would not be unreasonably withheld) and
only to Advisor's affiliates or another entity organized or acquired by Xxxx
XxXxxxxxxx for the purpose of providing consulting services. Subject to the
restrictions on assignment contained herein, the provisions of this Agreement
shall be binding on and inure to the benefit of each party hereto, and such
party's successors, personal representatives and assigns. This Agreement sets
forth the entire understanding between the parties hereto concerning the
subject matter contained herein, and supersedes all prior discussions and
agreements. In the event that any provision of this Agreement is held to be
unenforceable or invalid by any court of competent jurisdiction, the validity
and enforceability of the remaining provisions shall not be affected thereby.
As used herein, the term "person" shall include all natural persons,
corporations, trusts, partnerships, joint ventures, associations and other
entities. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument. This Agreement shall be governed by the laws of the State
of Texas.
Please sign and return one copy of this letter to the undersigned to
indicate your acceptance of the terms set forth herein, whereupon this letter
shall constitute a binding agreement between you and the undersigned as of the
date first above written.
Sincerely,
XxXXXXXXXX INTERNATIONAL, INC.
By: /S/ XXXX XxXXXXXXXX
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Xxxx XxXxxxxxxx, President
Accepted and Agreed:
MSU
By: /S/ XXXXXXX XXXXXXXX
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Xxxxxxx Xxxxxxxx, Chairman
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EXHIBIT 1
AT&T
Lucent Technologies
Xxxxx
Xxxx Atlantic
SBC Communication, Inc.
Bell South
GTE
MCI Communications
Sprint
America On-Line
Prodigy
Microsoft
Netscape
Tele-Communications, Inc.
Cisco Systems
MFS Communications
PSINet
Netcom Communications Services
Global Network Navigator
Apple
Viacom
Xxxxxx
Xxx Broadcasting
Time Xxxxxx
Xxxx Canada
Telmex
Disney
General Electric
Westinghouse
AST Research
Xxxxx Xxxxxx and/or Xxxxxx Group
Westell
Amati Communications
Sourcecom
Walmart
Northern Telecom
IDT Corporation
Compaq
