1
CONSULTING AGREEMENT
1. PARTIES.
1.1. This Consulting Agreement (this "Agreement") is made and entered
into effective as of January 15, 2001, by and between XxxxXxxxx.xxx, Ltd., a
Delaware corporation, (the "Company"), whose address is 0 Xxxx 0xx Xxxxxx,
Xxxxxxxxx, XX X0X 0X0 and, XXXXXX XXXXXXX, a natural person, (the "Consultant"),
whose address is
2. RECITALS.
2.1. This Agreement is made with reference to the following facts and
circumstances.
(a) The Company wishes to engage the services of the Consultant
to advise and consult with the Company on certain business and financial
matters as set forth in this Agreement.
(b) The Consultant is willing to accept such engagement, on the
terms set forth in this Agreement.
2.2. In consideration of the premises, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company and the
Consultant agree as follows.
3. ENGAGEMENT.
3.1. The Company hereby engages the services of the Consultant, as an
independent contractor, for a period of one year beginning on the date hereof,
and ending one year from and after the date hereof (the "Term"), and the
Consultant hereby accepts such engagement, for the purposes set forth in section
3.2. below.
3.2. The scope of the services to be rendered by the Consultant to the
Company are and are limited to the following:
(a) The Consultant shall, from time to time as the Company may
request, advise and consult with the Company's board of directors and
executive officers regarding (i) the Company's merger and acquisition
strategies, including the evaluation of targets and the structuring of
transactions; (ii) the Company's investor relations; and (iii) the Company's
business development activities, including major geographic and service
expansion plans.
(b) The Consultant shall devote such time to this engagement as
is reasonably necessary, but the Consultant need not devote his full time or
attention to the engagement. The Company recognizes that the Consultant has
numerous clients and engagements, and that this engagement is not exclusive.
(c) The services need not be rendered at the Company's offices
and may be rendered by telephonic communication; provided, however, that
upon the Company's request and reasonable notice, the Consultant will attend
meetings of the Company's board of directors and executive officers for the
purpose of advising and consulting with them with respect to matters within
the scope of this engagement.
(d) Anything in this Agreement to the contrary notwithstanding,
the services rendered by the Consultant under this Agreement shall not
include any services in connection with the offer or sale of securities and
will not directly or indirectly promote or maintain a market for the
Company's securities.
INITIALS
----------
Company
----------
Consultant
2
XXXXXXXXX.XXX, LTD. & XXXXXX X. XXXXXXX PAGE 2 OF 2 PAGE CONSULTING AGREEMENT
4. THE CONSULTANT'S FEES AND EXPENSES.
4.1. The Company shall pay the Consultant as a fee for his services
under this Agreement (the "Consulting Fee") 140,000 shares (the "Shares") of the
Company's common stock ("Common Stock"). The Consulting Fee shall be fully
earned and non-refundable in consideration of the Consultant's execution of this
Agreement.
4.2. Promptly upon the execution of this Agreement, the Company shall
cause the Shares to be issued to the Consultant under the Company's Directors
and Employees Stock Option and Stock Award Plan dated November 30, 2000 that is
registered under the Securities Act of 1933, as amended, pursuant to an
effective registration statement on form S8, dated January 2, 2001. The
certificates representing the Shares shall not contain any restrictive legends.
In connection with the issuance of the Shares to the Consultant, the Consultant
hereby represents and warrants to the Company that the Consultant is an
"accredited investor" as defined by paragraph (a) of SEC Rule 501.
4.3. The Company shall issue irrevocable instructions to its transfer
agent (the "Irrevocable Transfer Agent Instructions") to issue the certificates
representing the Shares in Depository Trust Corporation ("DTC") form, free and
clear of any legend, restriction or stop order, and deliver the shares, so
registered, to DTC for the Consultant's account. The Company warrants that no
instruction other than the Irrevocable Transfer Agent instructions referred to
in this Section 4.3 will be given by the Company to its transfer agent and that
the Shares shall otherwise be freely transferable on the books and records of
the Company. Nothing in this Section 4.3 shall affect in any way the
Consultant's obligations and agreement to comply with all applicable securities
laws upon resale of the Shares. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to Purchaser by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 4.3 will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 4.3, that
Consultant shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
4.4. In the event that the Company shall consummate a merger or
acquisition with an entity introduced by the Consultant during the Term, the
Company shall also pay the Consultant an advisory fee ("Advisory Fee") equal to
five percent (5%) of the first $5 million of the aggregate value of the
transaction, four percent (4%) of the next $5 million of aggregate value and one
(1%) of any value over $10 million. In the event that the consideration received
or paid in a transaction described in this Agreement is in whole or in part in a
form other than cash (such as securities) or is contingent upon the occurrence
or non occurrence of some future event (such as future earnings or additional
financing), the value of such non cash payments and future consideration, for
purposes of calculating the Consultant's fee, shall be the fair market value
thereof (as reasonably determined by the Company), as of the date of the
consummation of the transaction. The Advisory Fee shall be fully earned upon the
execution of a binding agreement for the transaction to which it relates, and
shall be paid at the closing or upon the initial funding of the transaction,
whichever occurs first. The Company shall pay the Consultant an Advisory Fee for
each transaction in which the Consultant has advised or consulted with the
Company during the Term, notwithstanding the parties to such transaction do not
execute a binding agreement until after the end of the Term, or that the
transaction does not close or fund until after the end of the Term.
4.5. The Shares delivered to the Consultant for his services under this
Agreement shall include the Consultant's costs and expenses incurred in the
performance of this Agreement, including travel, lodging, meals and legal fees.
5. CONFIDENTIAL INFORMATION.
5.1. The parties hereto recognize that a major need of the Company is to
preserve its specialized knowledge, trade secrets, and confidential information.
The strength and good will of the Company is derived from the specialized
knowledge, trade secrets, and confidential information generated from experience
with the activities undertaken by the Company and its subsidiaries The
disclosure of this information and knowledge to competitors
INITIALS
----------
Company
----------
Consultant
3
XXXXXXXXX.XXX LTD. & XXXXXX X. XXXXXXX PAGE 3 OF 3 PAGE CONSULTING AGREEMENT
would be beneficial to them and detrimental to the Company, as would the
disclosure of information about the marketing practices, pricing practices,
costs, profit margins, design specifications, analytical techniques, and similar
items of the Company and its subsidiaries. By reason of his being a Consultant
to the Company, Consultant has or will have access to, and will obtain,
specialized knowledge, trade secrets and confidential information about the
Company's operations and the operations of its subsidiaries, which operations
extend through the United States. Therefore, Consultant recognizes that the
Company is relying on these agreements in entering into this Agreement:
5.2 During and after the Term Consultant will not use, disclose to
others, or publish any inventions or any confidential business information about
the affairs of the Company, including but not limited to confidential
information concerning the Company's products, methods, engineering designs and
standards, analytical techniques, technical information, customer information,
employee information, and other confidential information acquired by him in the
course of his past or future services for the Company. Consultant agrees to hold
as the Company's property all memoranda, books, papers, letters, formulas and
other data, and all copies thereof and therefrom, in any way relating to the
Company's business and affairs, whether made by him or otherwise coming into his
possession, and on termination of his employment, or on demand of the Company,
at any time, to deliver the same to the Company within twenty four hours of such
termination or demand.
5.3 During the Term Consultant will not induce any employee of the
Company to leave the Company's employ or hire any such employee (unless the
Board of Directors of the Company shall have authorized such employment and the
Company shall have consented thereto in writing).
6. ARBITRATION OF DISPUTES, LITIGATION EXPENSES.
6.1. Any controversy or claim arising out of or relating to any acts
or omissions of either party hereto or any of the Company's officers,
directors, agents, affiliates, associates, employees or controlling persons
shall be settled by arbitration under the Federal Arbitration Act in accordance
with the commercial arbitration rules of the American Arbitration Association
("AAA") and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. In such arbitration proceedings, the
parties shall be entitled to any and all remedies that would be available in the
absence of this Section and the arbitrators, in rendering their decision, shall
follow the substantive laws that would otherwise be applicable. The parties
acknowledge that the subject matter of this Agreement is of unique value to
Consultant and agree that Consultant shall have the right to specific
enforcement of this Agreement. The arbitration of any dispute pursuant to this
Section shall be held in Houston, Texas. Notwithstanding the foregoing in order
to preserve the status quo pending the resolution by arbitration of a claim
seeking relief of an injunctive or equitable nature, any party, upon submitting
a matter to arbitration as required by this Section, may simultaneously or
thereafter seek a temporary restraining order or preliminary injunction from a
court of competent jurisdiction pending the outcome of the arbitration.
6.2. In the event of any litigation or other proceeding between the
Company and the Consultant with respect to the subject matter of this Agreement
and the enforcement of the rights hereunder, the losing party shall reimburse
the prevailing party for all of his/its reasonable costs and expenses, as well
as any forum fees, relating to such litigation or other proceeding, including,
without limitation, his/its reasonable attorneys' fees and expenses, provided
that such litigation or proceeding results in a
(a) final settlement requiring payment to the prevailing party;
or
(b) final judgment.
7. MISCELLANEOUS.
7.1. Relationship. The relationship between the Company and the
Consultant created by this Agreement is that of independent contractors.
Consultant understands and agrees that (i) Consultant will not be treated as an
employee of the Company for federal tax purposes; (ii) Company will not withhold
on behalf of Consultant pursuant to this Agreement any sums for income tax,
unemployment insurance, social security, or any other withholding pursuant to
any law or requirement of any governmental body relating to Consultant; (iii)
all of such payments,
INITIALS
---------
Company
-----------
Consultant
4
XXXXXXXXX.XXX LTD. & XXXXXX X. XXXXXXX PAGE 4 OF 4 PAGE CONSULTING AGREEMENT
withholdings, and benefits, if any, are the sole responsibility of Consultant;
and (iv) Consultant will indemnify and hold Company harmless from any and all
loss or liability arising with respect to such payments, withholdings, and
benefits, if any. In the event the Internal Revenue Service or any other
governmental agency should question or challenge the independent contractor
status of Consultant, the parties agree that Consultant and Company shall have
the right to participate in any discussion or negotiation occurring with such
agency or agencies, irrespective of who initiates the discussion or
negotiations. The services to be rendered by the Consultant pursuant to this
Agreement do not include the services or activities of an "investment adviser,"
as that term is defined by U.S. federal or state laws and, in performing
services under this Agreement, the Consultant shall not be deemed to be an
investment adviser under such laws.
7.2. Indemnity. The Company hereby agrees to defend, indemnify, and hold
the Consultant, and his employees, agents, partners and affiliates harmless from
and against any and all claims, damages, judgments, penalties, costs, and
expenses (including attorney fees and court costs now or hereafter arising
from the enforcement of this clause) arising directly or indirectly from the
activities of the Consultant or any of his employees, agents, partners or
affiliates under this Agreement, or from the activities of the Company or any of
its shareholders, officers, directors, employees, agents, partners or
affiliates, whether such claims are asserted by any governmental agency or any
other person. This indemnity shall survive termination of this Agreement.
7.3. Advertisement. The Company agrees that the Consultant has the right
to place advertisements in financial and other newspapers and journals at his
own expense describing his services to the Company.
7.4. Notices. Any notice or other communication required or permitted to
be given shall be in writing and shall be mailed by certified mail, return
receipt requested (or by the most nearly comparable method if mailed from or to
a location outside of the United States), or delivered against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section). Any
notice given to any corporate party shall be addressed to the attention of the
Corporation Secretary. Any notice of other communication given by certified mail
(or by such comparable method) shall be deemed given at the time of
certification thereof (or comparable act), except for a notice changing a
party's address which will be deemed given at the time of receipt thereof.
7.5. Survival of Obligations. The obligations of the parties under
Sections 6 and 7.2 of this Agreement shall survive the termination for any
reason of this Agreement (whether such termination is by the Company, by the
Consultant, upon the expiration of this Agreement or otherwise).
7.6. Severability. In case any one or more of the provisions or part of
the provision contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall be deemed not to affect any
other jurisdiction or any other provision or part of a provision of this
Agreement, but this Agreement shall be reformed and construed in
such jurisdiction as if such provision or part of a provision held to be invalid
or illegal or unenforceable had never been contained herein and such provision
or part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible. In furtherance and not in
limitation of the foregoing, the Company and Consultant each intend that the
covenants contained in Section 5 shall be deemed to be a series of separate
covenants, one for each county of the State of Texas and one for each and every
other state, territory or jurisdiction of the United States and any foreign
country set forth therein. If, in any judicial proceeding, a court shall refuse
to enforce any of such separate covenants, then such enforceable covenants shall
be deemed eliminated from the provisions hereof for the purpose of such
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced in such proceedings. If, in any judicial proceeding, a court
shall refuse to enforce any one or more of such separate covenants because the
total time thereof is deemed to be excessive or unreasonable, then it is the
intent of the parties hereto that such covenants, which would otherwise be
unenforceable due to such excessive or unreasonable period of time, be enforced
for such lesser period of time as shall be deemed reasonable and not excessive
by such court.
7.7. Entire Agreement, Amendment. This Agreement contains the entire
agreement between the Company and the Consultant with respect to the subject
matter thereof. Consultant acknowledges that he neither holds any
INITIALS
---------
Company
------------
Consultant
5
XXXXXXXXX.XXX LTD. & XXXXXX X. XXXXXXX PAGE 5 OF 5 PAGE CONSULTING AGREEMENT
right, warrant or option to acquire securities of the company, nor has the right
to any such rights, warrants or options, except pursuant to this Agreement. This
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by or on behalf of the party against whom
any amendment, waiver, change, modification or discharge is sought.
7.8. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas; provided, however, if any
provision of this Agreement is unenforceable under Texas law, but is enforceable
under the laws of the State of Delaware, then Delaware shall govern the
construction and enforcement of that provision. The courts of the State of Texas
shall have exclusive jurisdiction for any action arising out of or related to
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective as of
the date first above written.
The Consultant: The Company:
XxxxXxxxx.xxx Ltd.
/s/ XXXXXX XXXXXXX By /s/ XXX XXXXX
------------------------------- ------------------------------
XXXXXX XXXXXXX Xxx Xxxxx, President & Chief Executive Officer
Date signed Jan 15/01 Date signed Jan 15, 2001
-------------------- --------------------
INITIALS
---------
Company
-----------
Consultant
