EXHIBIT 10.14
March 20, 2001
PERSONAL AND CONFIDENTIAL
-------------------------
Via Email
Xx. Xxxxxxxx Xxxx
President
Xxxxxx Electronics, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Franklin:
MESA Partners, Inc. ("MESA") is pleased to act as an advisor as memorialized in
this Agreement ("Agreement") with Xxxxxx Electronics, Inc. and/or its
subsidiaries or affiliates (collectively, the "Company" or "HRVE") and in
connection with the establishment of NewCo (the "Transaction"). The focus of
NewCo is to create an organization that delivers high-end products, services and
support to the consumer market for the purposes of becoming the premier
integrator of home networks. A Home Network, ("HN") is defined as: a discrete
technology that enables multiple users in one residence to connect computing
equipment, entertainment devices and web-appliances to the Internet through one
high-speed connection in order to efficiently converge voice, video and data.
1. Term. The term of MESA's engagement shall commence on the date hereof and
continue for a period of 12 months, to be automatically renewed for an
additional 6-month terms unless terminated by either party in accordance
with paragraph 9 hereunder.
2. Services to be Rendered. In connection with its engagement hereunder, MESA
will perform such management services as may be considered reasonable for
the Transaction. Such services may include one or more of the following:
(a) Initial Management of NewCo. MESA will assist management of HRVE in
the development of NewCo. During the Term of this Agreement, MESA will
work with management of HRVE to establish the initial business
milestones for NewCo, some of which are outlined in Annex B.
(b) MESA shall also:
i. assist management of HRVE with the hiring into NewCo of
additional personnel needed to manage and operate NewCo during
and after the expiration or termination of this Agreement;
ii. if necessary and desirable, work with management of HRVE to
identify and develop corporate offices of NewCo;
iii. work with management of HRVE to develop, draft and create a
business plan for NewCo
(c) Other Services ("Other Services"). MESA may render such other advisory
services as may from time to time be agreed upon by MESA and the
Company.
3. Fees and Equity. The Company shall pay to MESA for its services hereunder
the following fees and equity:
(a) a fee of $20,000 a month the first payment of which is payable in cash
upon the execution of this letter;
(b) MESA will receive options to purchase shares of NewCo, ("Options").
The amount and terms of said Options will be determined jointly by
MESA and the Company within sixty (60) days of the date first written
above. In the event that there is no liquidity event ("Liquidity
Event" defined as a sale of NewCo to another party or a public
offering of securities of NewCo) for NewCo within a five (5) year
period from the date of this Agreement, MESA's Options in NewCo will
convert to Options in HRVE based upon a formula to be determined and
agreed upon by HRVE and MESA.
4. Expenses. In addition to any fees that may be payable to MESA hereunder and
regardless of whether any Transaction is proposed or consummated, HRVE
hereby agrees to reimburse MESA monthly for all reasonable travel and other
out-of-pocket expenses, which have been approved in advance by HRVE upon
presentation of receipts or supporting documentation, incurred in
connection with any actual or proposed Transaction or otherwise arising out
of MESA's performance of its obligations under this Agreement, including
all reasonable fees and disbursements of MESA's counsel in connection
herewith.
5. Remedies. Each party agrees to pay the other party on demand any and all of
the costs and expenses incurred by such party in connection with the
enforcement of its rights under this Agreement, including, without
limitation, the reasonable fees and disbursements of such party's counsel,
provided, this Agreement is not terminated for Cause.
6. Information; Notice of Events. Pursuant to this engagement, the Company
recognizes and confirms that MESA will be using information provided by or
on behalf of the Company, and that MESA does not assume any responsibility
for and may rely upon, without independent verification, the accuracy and
completeness of any such information. The Company hereby warrants that any
information relating to the Company that is furnished to MESA by or on
behalf of the Company will be fair, accurate and complete and will not
contain any material omissions or misstatements of fact. Until termination
of this engagement, the Company will notify MESA promptly of the occurrence
of any event, which might materially affect the Transaction or the
business, operations, condition (financial or otherwise) or prospects of
the Company.
7. Indemnity. MESA will be working on the Company's behalf and it is MESA's
policy to receive indemnification for engagements of this nature.
Accordingly, the Company agrees to the indemnity provisions and other
matters set forth in Annex A, which is incorporated by reference into this
letter.
8. Termination of Engagement. MESA's engagement hereunder may be terminated by
either the Company or MESA at any time after 60 days from the date hereof
with or without cause, upon thirty (30) days' prior written notice to the
other party. Notwithstanding the foregoing, the provisions of paragraphs 7,
8 and 9 hereof shall survive such termination or the completion of this
engagement.
9. Reduction of Services. In the event that HRVE wishes to alter the retainer
portion of the Agreement herein after the first ninety (90) days while
preserving the balance of the Agreement, both parties will agree to develop
new work requirements and a retainer for MESA that consistent with the
needs of HRVE and/or NewCo.
10. Confidentiality. With respect to all nonpublic, confidential or proprietary
in nature information concerning HRVE, MESA, NewCo, or the Transaction that
is made available to one party ("Recipient") by another party, the
Recipient agrees that it shall hold such information, including without
limitation, certain technical information and operational information
("Confidential Information") in strict confidence, shall not use such
information except for the sole purpose of evaluating and negotiating the
Transaction and shall not disseminate or disclose any of such information
other than to its directors, officers, employees, stockholders, affiliates,
agents and representatives (the "Representatives") who need to know such
information for the sole purpose of evaluating and performing its
obligations with respect to the Transaction (each of whom shall be informed
by the Recipient in writing and shall agree in writing to treat such
information confidentially). Confidential Information shall also include
all notes, analyses, compilations, studies or other documents that are
based on, contain or reflect Confidential Information. Confidential
Information that is furnished to the Recipient, whether furnished orally,
in writing or in graphic, encoded or other tangible form after the date of
this letter shall be treated confidentially and with at least the same
degree of care that the Recipient uses to treat its own information of a
similar nature. Upon termination of this Agreement, the Recipient shall
immediately return all such information, all copies thereof and all
Confidential Information prepared by a party based upon the same, upon the
furnishing party's request. The above limitations on use, dissemination and
disclosure shall not apply to information that (i) is learned by the
Recipient from a third party entitled to disclose it; (ii) becomes known
publicly other than through the Recipient or any party who received the
same through the Recipient; (iii) is required by law or court order to be
disclosed by the Recipient; or (iv) is disclosed with the express prior
written consent thereto of the furnishing party. The Recipient shall
undertake all necessary steps to ensure that the secrecy and
confidentiality of such information will be maintained in accordance with
the provisions of this paragraph.
11. Covenant Not to Compete; Non-Interference. MESA covenants and undertakes
that, during the Term of this Agreement and until one (1) year after the
final day MESA provides services to NewCo or HRVE, it will not, without the
prior written consent of HRVE and NewCo, directly or indirectly, and
whether as principal, agent, officer, director, employee, consultant, or
otherwise, alone or in association with any other person, firm,
corporation, or other business organization, carry on, or be engaged,
concerned, or take part in, or render services to, or own, share in the
earnings of, or invest in the stock, bonds, or other securities of any
person, firm, corporation, or other business organization (other than HRVE,
NewCo or its affiliates, if any) engaged in a business in the same
geographic market in which HRVE or NewCo conduct their respective business
which is directly similar to or in competition with any of the businesses
carried on by HRVE or NewCo (a "Similar Business") except in the course of
their services hereunder and except for securities owned by MESA as of the
date hereof being held by MESA for investment purposes only; provided,
however, that MESA may invest in stock, bonds, or other securities of any
Similar Business (but without otherwise participating in the activities of
such Similar Business) if (i) such stock, bonds, or other securities are
listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934; and
(ii) its investment does not exceed, in the case of any class of the
capital stock of any one issuer, three (3%) percent of the issued and
outstanding shares, or in the case of bonds or other securities, three (3%)
percent of the aggregate principal amount thereof issued and outstanding.
MESA covenants and undertakes that during the Term of this Agreement and
for a period of two (2) years after the final day MESA provides services to
HRVE or NewCo, it will not, whether for its own account or for the account
of any other person, firm, corporation or other business organization,
interfere with HRVE or NewCo's relationship with, or endeavor to entice
away from HRVE or NewCo, any person, firm, corporation or other business
organization who, or which at any time during the period this Agreement is
in effect, was a consultant, agent, employee, officer, director, supplier,
or a customer of, or in the habit of dealing with, HRVE or NewCo.
If any provision of this Section 15 is held by any court of competent
jurisdiction to be unenforceable because of the scope, duration or area of
applicability, such provision shall be deemed modified to the extent the
court modifies the scope, duration or area of applicability of such
provision to make it enforceable.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. All parties to this
Agreement hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and of the
United States of America located in the State of New York for any actions,
suits or proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action,
suit or proceeding relating thereto except in such courts). Each party to
this Agreement also hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising
out of this letter or the transactions contemplated hereby, in the courts
of the State of New York or the United States of America located in the
State of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
13. Miscellaneous. This Agreement (a) incorporates the entire understanding of
the parties with respect to the subject matter hereof and supersedes all
previous agreements should they exist with respect thereto, whether written
or oral, (b) may not be amended, modified or waived except in a writing
executed by NewCo and MESA, (c) shall be binding upon and inure to the
benefit of NewCo, MESA, the other indemnified parties and their respective
successors and assigns, and (d) may be executed in one or more
counterparts, including but not limited to facsimile, photocopy or other;
all of which taken together shall constitute one in the same instrument.
14. Notices. All notices, demands, requests, demands and other communications
required or otherwise given under this Agreement shall be in writing and
shall be deemed to have been duly given if: (i) delivered by hand with
written receipt therefor, (ii) forwarded by a third party company or
governmental entity providing delivery services in the ordinary course of
business which guarantees delivery the following business day, (iii) mailed
by registered or certified mail, return receipt requested, postage prepaid,
or (iv) transmitted by facsimile transmission electronically confirmed for
receipt, in full, by the other party no later than 5:00 p.m., local time,
on the date of transmission, addressed as follows:
If to Xxxxxx, to: Xxxxxx Electronics, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxx
Facsimile: (000) 000-0000
with a copy to: Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to MESA, to: MESA Partners, LLC
00 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
or, in the case of any of the parties hereto, at such other address as such
party shall have furnished to each of the other parties hereto in
accordance with this Section 14. Each such notice, demand, request or other
communication shall be deemed given (i) on the date of such delivery by
hand, (ii) on the first business day following the date of such delivery to
the overnight delivery service or facsimile transmission, or (iii) three
business days following such mailing.
Please confirm that the foregoing is in accordance with your understanding and
agreement with MESA by signing and returning to us a copy of this letter, which
shall become a binding agreement upon our receipt.
We look forward to working with you on this assignment.
Very truly yours,
MESA PARTNERS, INC.
By:/s/ Xxxxxxx Xxxxxxx
-----------------------------
Xxxxxxx Xxxxxxx
Managing Director
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
Xxxxxx Electronics, Inc.
By:/s/ Xxxxxxxx Xxxx
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Xxxxxxxx Xxxx
President
Annex A
Indemnification
In the event that a party (the "Indemnified Party") becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
person, including stockholders of another party (the "Indemnifying Party"), in
connection with any matter referred to in this Agreement, the Indemnifying Party
periodically will reimburse the Indemnified Party for its legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith. The Indemnifying Party also will indemnify and hold the
Indemnified Party harmless against any losses, claims, damages or liabilities to
any such person in connection with any matter referred to in this Agreement,
except to the extent that any such loss, claim, damage or liability results from
the gross negligence or bad faith of the Indemnified Party in performing the
services that are the subject of this Agreement. If for any reason the foregoing
indemnification is unavailable to the Indemnified Party or insufficient to hold
it harmless, then the Indemnifying Party shall contribute to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative economic
interests of the Indemnifying Party and its stockholders on the one hand and the
Indemnified Party on the other hand in the matters contemplated by this
Agreement as well as the relative fault of the Indemnifying Party and the
Indemnified Party with respect to such loss, claim, damage or liability and any
other relevant equitable considerations. The reimbursement, indemnity and
contribution obligations of the Indemnifying Party under this paragraph shall be
in addition to any liability which the Indemnifying Party may otherwise have,
shall extend upon the same terms and conditions to any affiliate of the
Indemnified Party and the partners, directors, agents, employees and controlling
persons (if any), as the case may be, of the Indemnified Party and any such
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Indemnifying Party, the
Indemnified Party, any such affiliate and any such person. The Indemnifying
Party also agrees that neither the Indemnified Party nor any of such affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Indemnifying Party or any person asserting claims on behalf of
or in right of the Indemnifying Party for or in connection with any matter
referred to in this Agreement except to the extent that any losses, claims,
damages, liabilities or expenses incurred by the Indemnifying Party result from
the gross negligence or bad faith of the Indemnified Party in performing the
services that are the subject this Agreement.
Annex B
MILESTONES
The parties to this Agreement agree to define and establish the key milestones
for the development of NewCo. MESA shall work with management of Xxxxxx to
achieve these objectives during the first several months. The following is an
initial listing of these milestones:
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# MILESTONES
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1 o Complete Business Plan, Business Model and Financial Projections
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2 o Hire and Train Necessary Sales and Implementation Staff
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3 o Develop Vendor and Partner Relationships for Sales and Service
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