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EXHIBIT 10.35
February 5, 2001
Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx, Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
Accelerated Networks, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Dear Messrs. Krausz, Kuhling, Tan & Xxxxxx:
RE: Retainer Agreement between Regent Pacific Management Corporation and
Accelerated Networks, Inc.
I am writing this letter, pursuant to your request, to set forth the terms and
conditions upon which Regent Pacific Management Corporation, a California
corporation ("Regent Pacific"), will be engaged to perform certain management
services for Accelerated Networks, Inc., a Delaware corporation, and its wholly
owned and controlled subsidiaries (collectively, "Accelerated"), under certain
guarantees and indemnities to be provided by the company and the board. This
agreement is contingent upon and subject to an indemnification and guarantee
agreement, in a form acceptable to Regent Pacific.
Included within these services will be the following work product, which Regent
Pacific will supply to Accelerated in accordance with the terms of this letter
and for the agreed-upon cash payments required by this letter:
1. Regent Pacific agrees to provide a six person crisis team, to
immediately assume the chief executive and general management
responsibilities of Accelerated, and to develop and implement a
restructuring and recovery plan for Accelerated. The goal of this
assignment shall be to control the immediate crisis situation and
redirect the company with respect to the potential financial and
operational restructuring of the ongoing business of Accelerated.
2. Regent Pacific shall provide the services of Xxxx X. Xxxxx, Chairman and
Chief Executive Officer of Regent Pacific Management Corporation, who
shall be a part of the crisis team and lead the engagement on behalf of
Regent Pacific as the board-appointed Chairman and Chief Executive
Officer of Accelerated. Regent Pacific shall be appointed by the Board
of Directors to
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 2
provide General Management services to Accelerated. Both Regent Pacific
and Xx. Xxxxx shall report to the Board of Directors of Accelerated and
shall be solely accountable to the Board for fulfilling the obligations
of this engagement.
Regent Pacific's services do not include the following activities and/or work
product:
With the exception of Xxxx X. Xxxxx, Regent Pacific personnel provided
under the terms of this engagement shall not be appointed officers of
Accelerated, and shall not accept nor be held accountable for the
fiduciary obligations of an officer or director of Accelerated, except
as mutually agreed upon by the parties.
Regent Pacific is prepared to begin our services this week, contingent upon:
1. This duly executed retainer agreement on the part of Accelerated;
2. The transfer of and receipt by Regent Pacific of the required initial
payments of this retainer agreement;
3. Duly executed indemnification agreement between Accelerated and Xx.
Xxxxx and Accelerated and Regent Pacific in a form acceptable to Regent
Pacific.
4. Duly executed employee stock option agreement in a form acceptable to
Regent Pacific.
In addition to Xx. Xxxxx, the initial team assigned will be Xxxxx X. Service,
Xxxxxx X. Xxxxx, H. Xxxxxxx Xxxxx, Xxxxxxx X. Xxxxx, Xxxxxxxx Xx Xxxxx, Xxxxxx
X. Xxxxxxx, and Xxxxxxxx X. Xxxxxxxx, Principals of Regent Pacific. You
understand that Regent Pacific retains the right to assign or interchange these
people with other people as the work progresses, in order to address your
requirements, as long as the fee paid for our services is not increased for the
included work product.
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 3
FEES: We have agreed to provide the work product included in this agreement for
a period of eighteen (18) months, including twelve (12) months of non-cancelable
services. This service shall be $75,000 per week payable in four (4) week
increments, each to be paid in advance of each Regent Pacific standard four-week
billing period. It is agreed and understood between us that the payments of such
cash fees are to be made immediately preceding the start of each four-week
billing period, and that failure to pay such periodic payments when due shall
constitute a breach of this agreement by Accelerated. It is further understood
that Regent Pacific's fees are to be paid in advance of the work to be
performed, and that the initial payment is to be paid on or before February 9,
2001. It is further agreed that such cash payments are earned in full upon
receipt by Regent Pacific, by virtue of our accepting this agreement and the
responsibilities it entails, and are nonrefundable.
ADVANCE RETAINER: In the light of the uncertainty of the situation facing
Accelerated, Accelerated agrees to pay Regent Pacific an advance four (4) weeks
retainer for services which may be rendered and expenses which may be incurred
in connection with this engagement. The amount of that retainer is to be in the
sum of $300,000. The funds shall be deposited in an escrow account titled
"Regent Pacific Management Corporation, for the benefit of Accelerated"
Immediately prior to any cancellation by Accelerated prior to the expiration of
the non-cancelable period or, thereafter, without 60 days written notice, or
immediately upon the filing of any petition in bankruptcy by or against
Accelerated, the retainer, plus any interest earned thereon, shall become the
property of Regent Pacific, free and clear of any claims of Accelerated, and
shall be transferred to Regent Pacific's general account. In such an event the
retainer shall be deemed earned in full by virtue of Regent Pacific's
undertaking this engagement and be nonrefundable. This sum is in addition to and
not in satisfaction of any damages which Regent Pacific may otherwise recover
against Accelerated for breach of this agreement, and reflects Accelerated's
agreement that the retainer represents the minimum fee for Regent Pacific's
acceptance of the agreement and the work undertaken, irrespective of the amount
of time actually spent by Regent Pacific in the course of its employment. In the
event that this agreement expires upon completion of the term, or terminates in
accordance with its cancellation provisions, the escrow account, plus any
interest, will be returned to Accelerated within five business days after such
expiration or termination.
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 4
TERM OF AGREEMENT: The term of this agreement shall be for eighteen (18) months,
unless earlier terminated in accordance with this paragraph. Regent Pacific
hereby commits the availability of its resources to Accelerated under this
agreement for the full eighteen (18) month term of the engagement. Accelerated
may discharge Regent Pacific at any time after the non-cancelable period
provided that Accelerated had delivered 60-day written notice of intent to
cancel this agreement. Regent Pacific may withdraw from this assignment at any
time with Accelerated's consent or for good cause without Accelerated's consent.
Good cause includes Accelerated's breach of this agreement (including
Accelerated's failure to pay any invoice within five working days of
presentation), or any fact or circumstance that would render our continuing
participation in the assignment unethical or unlawful.
EXPENSE REIMBURSEMENT: In addition to the fees, any requests for compensation
will also include certain charges for costs and expenses. Such costs and
expenses will include, among others, charges for messenger services, air
couriers, word processing services, photocopying, airfare, travel and reasonable
living expenses, postage, long distance telephone, legal advice, and other
charges customarily invoiced by professional firms for reimbursement of
out-of-pocket expenses. Said expenses shall not include meal expenses except
when Regent Pacific professionals are engaged in business-related activities and
company travel. Regent Pacific will periodically present invoices to Accelerated
for reimbursement of such charges, and Accelerated agrees to pay such invoices
within five (5) working days of presentation.
We will provide regular progress reviews to Accelerated and its Board of
Directors at approximately biweekly intervals, as the work progresses. These
progress reviews will include a discussion of the alternatives available to
Accelerated, the performance of the company relative to the restructuring of the
ongoing business. In addition, Regent Pacific requires, and Accelerated agrees,
that the Board of Directors of Accelerated will be available to Regent Pacific
on a reasonable consultation and communication basis and will meet with Regent
Pacific in person in regularly scheduled monthly board meetings to review the
status of the engagement.
During the progress of the work, should circumstances warrant, we may apply for
additions to the retainer fees, and attendant increases in the payments
scheduled above. Should we seek such additional compensation in order to
continue the level
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 1
of effort required by the undertaking, we will do so based upon our professional
guideline hourly rates. We understand and acknowledge that nothing in this
agreement obligates Accelerated to pay such additional retainer fees or other
compensation unless the Accelerated Board of Directors shall have agreed to make
such payments after a written request by Regent Pacific. As you know, our
professional guideline hourly rates range from $275 to $500. Our guideline
hourly rates are adjusted periodically, typically on January 1 of each year, to
reflect the advancing experience, capabilities and seniority of our
professionals as well as general economic factors.
It is our firm's practice to charge our clients for services rendered based upon
not only the total number of hours charged at guideline hourly rates, but also
upon such other factors as: the complexity of the problems presented to us; the
amount at issue; the results accomplished; the skill we exercised in
accomplishing those results; the extent to which our services were rendered
after normal business hours or on other-than-normal business days; delay in
receipt of our compensation; and the extent to which we were at risk in being
paid. To the extent that Regent Pacific's request for compensation exceeds the
total number of hours charged at guideline hourly rates, Regent Pacific will
consult with Accelerated before making that request.
Because of the breadth and nature of our practice, from time to time our firm
may work for one client whose interest may be opposed to that of another client,
for which we work in an unrelated matter. Please be assured that, despite any
potential difference in the interests of our clients, we strictly preserve all
client confidences and zealously pursue the interests of each of our clients.
Accelerated agrees that it does not consider such concurrent work in unrelated
matters of Accelerated and any other client of Regent Pacific to be
inappropriate, and therefore waives any objections to any such present or future
concurrent assignments provided, however, that such waiver shall not apply to
any willful misconduct or breach of confidentiality obligations of Regent
Pacific hereunder.
Except in the case of willful misconduct or gross negligence, Accelerated shall
indemnify, defend, and hold Regent Pacific, its officers, directors, principals,
associates, affiliates, employees, agents, and counsel, harmless against any
damages, costs, fines, penalties, liabilities, attorneys' and other professional
fees and disbursements, suffered, incurred by, or asserted against, Regent
Pacific, its officers,
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 6
directors, principals, associates, affiliates, employees, agents, and/or
counsel, including any amounts incurred or paid in settlement or any judgment of
any action, suit, or proceeding brought under any statute, at common law, or
otherwise, which arises under or in connection with the performance by Regent
Pacific of services pursuant to this agreement and any amendment or modification
thereto. The obligations of Accelerated under this paragraph are hereinafter
collectively referred to as "Indemnity Obligations." The Indemnity Obligations
shall survive, for a period of five (5) years, any termination of Regent
Pacific's services under this agreement and any amendment or modification
thereto. Accelerated agrees to promptly tender any payments due to Regent
Pacific, its officers, directors, principals, associates, affiliates, employees,
agents, and/or counsel, under or in respect of the Indemnity Obligations, within
three (3) business days following written demand by Regent Pacific, its
officers, directors, principals, associates, affiliates, employees, agents,
and/or counsel. Accelerated's Indemnity Obligations shall not apply to amounts
paid in settlement of any loss, claim, damage, liability, or action if such
settlement is effected without the consent of Accelerated, which consent shall
not be unreasonably withheld.
CONFIDENTIAL INFORMATION: Regent Pacific and its team of crisis managers shall
have access under this agreement to certain proprietary and/or confidential
information with respect to Accelerated's business. Regent Pacific hereby agrees
to protect such confidential information as though it were Regent Pacific's own
confidential information, in accordance with the following terms and conditions:
1. Accelerated shall permit Regent Pacific to review financial and
proprietary information necessary to Regent Pacific's participation in
Accelerated's management.
2. Accelerated shall permit, and Regent Pacific shall require, review of
all Accelerated Board of Directors minutes and all executive actions
taken within the three months prior to the execution of this agreement.
3. Regent Pacific shall maintain the confidentiality of all such
information and prevent the unauthorized disclosure thereof. No such
information shall be made available for the use of any other party or be
divulged to others unless it:
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 7
a. is independently developed by Regent Pacific, provided that the
person or persons developing same have had no access to confidential
information received from Accelerated;
b. is or becomes publicly available; or
c. is rightfully and lawfully received by Regent Pacific from an
independent third party.
This agreement is made under the laws of the State of California. If any legal
action arises under this Agreement or by reason of an asserted breach of it, the
prevailing party shall be entitled to recover all costs and expenses, including
reasonable attorney's fees, incurred in enforcing or attempting to enforce the
terms of this agreement.
NON-SOLICITATION: in recognition of the fact that the Regent Pacific individuals
that we provide to Accelerated under this agreement may perform similar services
from time to time for others, this agreement shall not prevent Regent Pacific
from performing such similar services or restrict Regent Pacific from using such
individuals. Accelerated agrees that it shall not, except by mutual agreement
between the parties, during the term of this agreement nor for a period of three
(3) years after its termination, solicit for employment nor employ, whether as
employee or independent contractor or agent, any person who performs services
under this agreement. It is agreed that in the event of a breach of this
paragraph by Accelerated, it would be impractical or extremely difficult to fix
actual damages and, therefore, Regent Pacific and Accelerated agree that if
Accelerated breaches this paragraph, then Accelerated shall pay to Regent
Pacific $390,000 per individual solicited or employed as employee, independent
contractor or agent, as Liquidated Damages and not as a penalty, which is agreed
by Regent Pacific and Accelerated to represent reasonable compensation for the
foreseeable loss that will, in all likelihood, be incurred because of such
breach.
It is our policy to provide such additional services as you may request, in
addition to those covered in this letter, when qualified individuals are
available to fulfill your request. In such instances, the additional services
will be provided and paid for in accordance with Regent Pacific's guideline
hourly rates as contained in
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 8
Regent Pacific's published fee schedules, a copy of which is enclosed with this
agreement.
This constitutes the entire understanding between Regent Pacific and Accelerated
regarding our services. Further, this agreement supersedes and replaces any
prior agreement(s) between the parties. By executing this agreement you
acknowledge that you have read it carefully and understand all of its terms.
This agreement cannot be modified except by further written agreement signed by
each party.
If you have any questions about the foregoing, please call me. If Accelerated is
in agreement with the foregoing, and it accurately represents your understanding
of the agreement between Accelerated and our firm, please approve the enclosed
copy of this letter, and return the approved copy to me, along with the advance
retainer of $300,000 and the first four (4) week service fee of $300,000. Said
payments may be wire-transferred to the account of Regent Pacific Management
Corporation at Comerica Bank, 000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Account #1890652975, Routing number 000000000. Our contact there is Xxxx
Xxxxxxxx at (000) 000-0000. If there are any questions with regard to the terms
set forth herein, kindly contact me immediately. In order to maintain continuity
in scheduling of our resources, we ask that we receive your affirmative response
as soon as possible. In any event, this offer to provide our services will
expire on February 9, 2001 unless accepted by you prior to that date, or
extended in writing by an officer of Regent Pacific. Please understand that we
can assume no responsibility in connection with the services to be provided
under this agreement until the signed copy has been returned and the required
funds as agreed to by us have been received.
Very truly yours,
REGENT PACIFIC MANAGEMENT CORPORATION
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chairman and Chief Executive Officer
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 9
THE FOREGOING IS HEREBY APPROVED AND AGREED TO:
DATED: ____________________, 2001
ACCELERATED NETWORKS, INC.
(Signifies full agreement with all terms and conditions)
BY: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx Title: Director
On Behalf of the Board of Directors
BY: /s/ Xxxxxx X. Xxxxxxx Xx.
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Name: Xxxxxx X. Xxxxxxx, Xx. Title: Director
On Behalf of the Board of Directors
BY: /s/ Lip-Bu Tan
-----------------------------------------------------
Name: Lip-Bu Tan Title: Director
On Behalf of the Board of Directors
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Xx. Xxxxxx X. Xxxxxx, Director
Xx. Xxxxxx X. Xxxxxxx Xx., Director
Mr. Lip-Bu Tan, Director
Mr. Xxxxx Xxxxxx, Director
February 5, 2001
Page 10
BY: /s/ Xxxxx Xxxxxx
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Mr. Xxxxx Xxxxxx Title: Director
On Behalf of the Board of Directors
