RESTATED CONSULTING AGREEMENT
REFLECTING AMENDMENTS AS OF
DECEMBER 30, 1998 AND JUNE 8, 1999
SECOND AMENDMENT made as of June 8, 1999 to the Agreement dated as of
October 1, 1997 (the "Agreement") and amended as of December 30, 1998 between
Broadland Capital Partners ("Broadland") having an office at 00000 Xxxxxxxx
Xxxxxxx Xxxxxx, Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000 and Xxxx Systems Inc. (the
"Company") having an office at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx
00000 as follows: The Agreement remains in full force and effect, effective as
of October 1, 1997, subject to the limited changes to the preamble and Sections
1 through 3 as restated below:
WHEREAS, in entering into this Agreement, the Company intends to enhance
its ability greatly to achieve three important corporate goals (collectively
hereinafter referred to as the "Goals") as follows:
(a) to become a publicly owned company either through an initial public
offering of shares or a merger with an already public entity, (or
otherwise) by November 30, 2001 (the "First Goal");
(b) (this Second Goal is deleted); and
(c) from September 1998 and until November 30, 2001, to use its shares as
consideration for the acquisition of entities having an aggregate
annual revenue of Fifteen Million Dollars ($15,000,000) (the "Third
Goal").
WHEREAS, Broadland, through its principal, Xxxxxx Xxxxx, has the
capability and experience to significantly contribute to the achievement of the
Company's Goals:
WHEREAS, in view of such capability and experience, the Company wishes to
engage the services of Broadland, and, therefore, through Broadland its
principal, Xxxxxx Xxxxx, upon the following terms and conditions:
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the parties hereto, Broadland and
the Company agree as follows:
1. Broadland, through its principal, Xxxxxx Xxxxx, will provide
the following services (the "Services") to the Company and its
Chief Executive Officer.
SERVICES
- Assist the Chief Executive Officer with the completion of the
Company's five-year Strategic (Equity) Plan. (Taking the Business
Plan and developing an appropriate Equity Plan to maximize the value
of the Company's Market Value.)
- Identify and assist the Chief Executive Officer in the selection of
appropriate investment banking firms.
- Assist the Chief Executive Officer with the IPO Project Management
Process.
- Introduce additional market makers and research analysts subsequent to
the IPO.
- Assist the Chief Executive Officer with selection of, the building of
relationships, and the negotiations with potential acquisitions.
- Continue other services as requested by the Chief Executive Officer.
2. COMPENSATION TO BROADLAND FOR THE SERVICES:
(a) Beginning December 1, 1998 and until November 30, 2001, Broadland (in
exchange for the above-described services of Xxxxxx Xxxxx) shall
receive a monthly fee, payable on the first day of each month, of
Three Thousand Five Hundred Dollars ($3,500) together with
reimbursement of out-of-pocket expenses (hotel, airfare, etc.)
approved in writing in advance by the Chief Executive Officer of the
Company. This Agreement as well as said fee may be canceled upon
thirty (30) days written notice by the Company to Broadland at any
time in the Company's sole discretion.
(b) WARRANTS
(i) The text of section 2(b)(i) is hereby deleted and replaced
with the following:
"In addition to the monthly advisory fee, warrants, in the
form of Exhibit A attached hereto (the "Warrants") to
purchase shares of the Company's common stock at $3.50 per
share (or the IPO price with respect to warrants that vest
upon completion of the IPO, as described below). Neither
Broadland nor Xxxxxx Xxxxx shall have any beneficial or
legal interest in shares of the Company until any such
Warrants are exercised and shares are purchased thereunder."
(ii) NUMBER OF WARRANTS: The Warrants shall grant Broadland the
right to purchase up to 250,000 shares of the Company's common
stock at the Warrant Price.
(iii) THE WARRANTS SHALL VEST AS FOLLOWS: Warrants to Purchase
250,000 shares of Xxxx Common Stock shall be vested and
exercisable as follows:
Warrants Exercise Price Vesting
-------- -------------- -------
50,000 At IPO Price At the completion of the IPO
50,000 $3.50/Share At Closing of XCD acquisition
50,000 $3.50/Share At Closing of Telgate acquisition
50,000 $3.50/Share At Closing of major or strategic acquisition
25,000 $3.50/Share At Closing of minor or strategic acquisition
10,000 $3.50/Share At Closing of minor acquisition
15,000 $3.50/Share Other acquisition projects as negotiated
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(iv) The Warrants must be exercised within five (5) years after
they vest or, thereafter, they shall expire and become null
and void.
3. TERM:
After the date that the Company first becomes a publicly owned
entity, this Agreement shall terminate automatically upon the
first to occur of the following:
(a) The date November 30, 2001;
(b) if Broadland ceases to provide the Company with the
services of Xxxxxx Xxxxx;
(c) the death of Xxxxxx Xxxxx; or
(d) the commencement of the permanent disability of Xxxxxx
Xxxxx.
For purposes of the foregoing, the term "permanent disability"
shall mean the inability of Xxxxxx Xxxxx due to illness,
accident or any other physical or mental impairment to perform
his duties hereunder (which include limited and reasonable
services requested by the Company) in a normal manner for a
period of three (3) months, whether or not consecutive, in any
twelve (12) month period during the term of this Agreement.
Warrants which shall have vested shall be exercisable by
Xxxxxx Xxxxx or in the event of his death by the estate or
heirs of Xxxxxx Xxxxx, despite the termination of this
Agreement. Upon the termination of this Agreement, any
Warrants remaining unvested shall expire and become null and
void.
4. INDEPENDENT CONTRACTOR:
The Company and Broadland agree and acknowledge that in the
performance of this Agreement, or any part thereof, Broadland
and Xxxxxx Xxxxx shall together act as an independent
contractor and not as the agent, servant, employee or
representative of the Company. No other direction or control,
except as specifically set forth herein, shall be exercised by
the Company over the performance of the work of Broadland or
Xxxxxx Xxxxx. Neither Broadland nor Xxxxxx Xxxxx shall have
any right in, or claims to, any Company employee benefits and
neither is a Company employee. Except as authorized in
advance by the Chief Executive Officer of the Company, neither
Broadland nor Xxxxxx Xxxxx shall have any authority to bind or
obligate the Company in any manner, nor shall Broadland or
Xxxxxx Xxxxx commence negotiations on behalf of the Company
with any third party.
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5. NON ASSIGNMENT:
Broadland may not assign its rights or delegate its duties
under this Agreement without the prior written consent of the
Chief Executive Officer of the Company and any assignment or
delegation in contravention of this obligation shall be void.
6. DISCLOSURES:
Neither Broadland nor Xxxxxx Xxxxx shall disclose to any one
outside of the Company nor use for any purpose other than the
business of the Company, any confidential information,
inventions, trade secrets, or materials, without first
obtaining the written permission of the Chief Executive
Officer of the Company during the term of this Agreement and
at all times thereafter.
7. MISCELLANEOUS:
This Agreement contains the entire understanding of the
parties, and there are no representations, warranties,
promises, covenants or agreements except as specifically set
forth herein.
8. GOVERNING LAW:
This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of
California without regard to its conflict of law rules. The
parties hereby agree to submit themselves to the exclusive
jurisdiction and venue of the Superior Court of Orange County
with respect to any dispute or interpretation arising out of
or in connection with this Agreement.
Broadland Capital Partners Xxxx Group, Inc. (successor to Xxxx
Systems, Inc.)
BY: BY:
----------------------------- -----------------------------
Xxxxxx Xxxxx, President Xxxxxxx X. Xxxx, Chairman and
Chief Executive Officer
--------------------------------
Xxxxxx Xxxxx, Individually
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SECOND AMENDMENT
TO
CONSULTING AGREEMENT
The Consulting Agreement made as of October 1, 1997 ("Agreement")
between Broadland Capital Partners ("Broadland") and Xxxx Systems, Inc.
("Company"), as amended as of December 30, 1998, is further amended as follows:
The text of Section 2(b)(i) is hereby deleted and replaced with
the following: "In addition to the monthly advisory fee,
warrants, in the form of Exhibit A attached hereto (the
"Warrants") to purchase shares of the Company's common stock at
$3.50 per share (or the IPO price with respect to warrants that
vest upon completion of the IPO, as described below). Neither
Broadland nor Xxxxxx Xxxxx shall have any beneficial or legal
interest in shares of the Company until any such Warrants are
exercised and shares are purchased thereunder."
The test of Section 2(b)(ii) is hereby deleted and replaced
with the following: "NUMBER OF WARRANTS: The Warrants shall
grant Broadland the right to purchase up to 250,000 shares of
the Company's stock at the Warrant Price."
Section 2(b)(iii), (a),(b), (c) and (d) are hereby deleted and
replaced with the following:
(iii) THE WARRANTS SHALL VEST AS FOLLOWS:
Warrants to Purchase 250,000 shares of Xxxx Common Stock
shall be vested and exercisable as follows:
Warrants Exercise Price Vesting
-------- -------------- -------
50,000 At IPO Price At the completion of the IPO
50,000 $3.50/Share At Closing of XCD acquisition
50,000 $3.50/Share At Closing of Telgate acquisition
50,000 $3.50/Share At Closing of major or strategic acquisition
25,000 $3.50/Share At Closing of minor or strategic acquisition
10,000 $3.50/Share At Closing of minor acquisition
15,000 $3.50/Share Other acquisition projects as negotiated
Conforming changes shall be made to the Form of Warrant
attached to the Agreement.
This Amendment is reflected in the attached Restated Consulting
Agreement and the attached first and second pages of the attached Warrant.
This Amendment is made as of June 8, 1999.
Broadland Capital Partners Xxxx Group, Inc. (successor to Xxxx
Systems, Inc.)
BY: BY:
----------------------------- -----------------------------
Xxxxxx Xxxxx, President Xxxxxxx X. Xxxx, Chairman and
Chief Executive Officer
--------------------------------
Xxxxxx Xxxxx, Individually
