CONSULTING AND FINDERS AGREEMENT
This CONSULTING AND FINDERS AGREEMENT (this "AGREEMENT") dated February 13,
2002, is entered into by and between Brookstreet Securities Corporation, a
California corporation, whose address is 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000 and Xxxx X. Xxxxxx, an individual whose address is the same as
that of Brookstreet Securities Corporation (together, "CONSULTANT"), Sensar
Corporation, a Nevada corporation (the "COMPANY"), whose address at the
effective time of this Agreement shall be Xxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000, and VitalStream, Inc., a Delaware corporation ("VITALSTREAM"),
whose address is Xxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000.
RECITALS:
WHEREAS, the Company and VitalStream have entered into an Agreement and
Plan of Merger dated February 13, 2002 (the "MERGER AGREEMENT"), pursuant to
which VitalStream Operating Corporation, a Delaware corporation and wholly-owned
subsidiary of the Company ("MERGER SUB") has agreed to merge (the "MERGER") with
and into VitalStream; and
WHEREAS, VitalStream and Consultant previously entered into an Investment
Advisory Agreement dated August 16, 2001 (the "ORIGINAL AGREEMENT"). The
Original Agreement was amended by that certain Investment Advisory Agreement
dated January 23, 2002 by and between VitalStream and Consultant (the "REVISED
AGREEMENT"); and
WHEREAS, Consultant provided certain finders services to the Company and
VitalStream in connection with the Merger, and the Company, VitalStream and
Consultant desire to memorialize their agreement with respect to Consultant's
finders' fee; and
WHEREAS, Consultant has experience in investor relations, and the Company,
VitalStream and Consultant desire for Consultant to provide ongoing investor
relations services to the Company; and
WHEREAS, VitalStream and Consultant desire to terminate the Original
Agreement and the Revised Agreement and enter into a new agreement setting forth
the terms and conditions of their relationship, all as more particularly set
forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company,
VitalStream and Consultant hereby agree as follows:
1. FINDERS AGREEMENTS. Consultant has provided certain finders services
to the Company and VitalStream in connection with its identification of
VitalStream as a potential merger candidate and in structuring such
transactions.
2. FEES. As consideration for such services as well as the consulting
services set forth in Section 3 hereof, the Company shall pay to Consultant,
when and if the Merger (or a
similar merger, asset sale, or other consolidation transaction involving the
consolidation of VitalStream and the Company) is consummated, the following
consideration (such consideration shall be full and final satisfaction for all
services rendered by Consultant to VitalStream and Company):
(a) 2.1% of Sensar's total cash balance as of the time the Merger
becomes effective (the "EFFECTIVE TIME"); and
(b) 2.1% of the net proceeds actually received by Sensar from the
exercise of the stock options issued to Messrs. Xxxxx Xxxxxxxx, Xxxxxx
Xxxxxxxxxx, Xxxxxx Xxxx and Xxxxx X. Xxxxxxxxxxx pursuant to Section 5.7(c) of
the Merger Agreement and the warrant issued Xxx Xxxxx pursuant to Section 5.7(d)
of the Merger Agreement, payable in cash within twenty (20) calendar days of
Sensar's receipt of such proceeds; and
(c) 2.1% of the net proceeds from the sale of Sensar's investment in
Nex2, provided that such sale occurs within one (1) year of the Effective Time,
payable in cash within thirty (30) calendar days of receipt by Sensar of any
such proceeds; and
(d) As soon as practicable after the Effective Time, Company shall
execute and deliver to Xxxx X. Xxxxxx a Stock Purchase Warrant in the form
attached hereto as EXHIBIT A; and
(e) As soon as practicable after the Effective Time, Company shall
execute and deliver to Brookstreet Securities Corporation a Stock Purchase
Warrant in the form attached hereto as EXHIBIT B.
(f) As soon as practicable after the Effective Time, Company shall
execute and deliver to Consultant a Registration Rights Agreement in the form
attached hereto as EXHIBIT C.
3. CONSULTING.
(a) CONSULTANT SERVICES. Effective as of the Effective Time,
Consultant is hereby engaged as an outside consultant to the Company and
VitalStream, and, as requested by the Company or VitalStream, subject to the
terms and conditions of this Agreement, Consultant shall provide advice and
information to the Company and VitalStream regarding investor relations (the
"SERVICES") throughout the Term (as defined below). Consultant shall provide the
Services when and as reasonably requested by the Company or VitalStream, up to a
maximum of 20 hours per month. Consultant shall receive reasonable prior notice
of each time Consultant is being asked to perform Services. The Services shall
include, but not be limited to, the following:
(i) Pre-release review of news releases and other corporate
communications as requested from time to time by VitalStream or the Company.
(ii) Assistance to VitalStream and the Company in communicating
with institutional investors in regards to VitalStream's or the Company's
customers, partners, competitors and finances.
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(iii) Preparation of a research report covering VitalStream and
the Company. The report, if any, will be evaluated by Consultant, VitalStream
and the Company and, if appropriate for release, published and disseminated to
Consultant's clients and other investors.
(iv) Assistance to VitalStream and the Company in merger and
acquisition activities. Such assistance shall include, but not be limited to,
negotiation of transactions, analysis of potential mergers/acquisitions and
referral of potential merger/acquisition candidates.
(v) Answering questions and rendering advice as required by
VitalStream or the Company.
(vi) Assistance to VitalStream and the Company in commercial
banking negotiations, including, but not limited to, obtaining credit line,
letters of credit for interim financing or "bridge capital" for mergers or
acquisitions.
(b) TERM. This Agreement shall be valid and binding on the parties
hereto as of the date first set forth above; provided, however, none of the
affirmative covenants hereunder shall be effective unless and until the Merger
is consummated. If (a) the Merger Agreement is terminated pursuant to Article
VII thereof, or (b) the Merger is not consummated by June 30, 2002, the
affirmative covenants in this Agreement shall not become effective, and this
Agreement shall be void ab initio. If the Merger Agreement is consummated, the
affirmative covenants of this Agreement shall be effective during the period
commencing at the Effective Time and continuing until December 31, 2002 (the
"TERM").
4. MANNER OF SERVICES. Consultant shall provide the Services to the
Company and VitalStream in the highest quality manner and shall adhere to
professional standards customary for other professionals performing similar
functions. Consultant agrees to devote such time and attention, up to a maximum
of 20 hours per month, as is necessary and appropriate to perform the Services
on a timely basis and in a professional manner.
5. INDEPENDENT CONTRACTOR.
(a) Consultant will not be an employee of the Company or VitalStream
for any purpose whatsoever, but will be an independent contractor for all
purposes, including with respect to workers' compensation laws, unemployment
insurance laws, Social Security laws, and the United States Internal Revenue
Code. For that reason, no payroll deductions or payments will be made by the
Company or VitalStream for unemployment insurance, workers' compensation, Social
Security, or taxes. Consultant understands and agrees that Consultant shall be
responsible for its federal, state and local income taxes, self-employment
taxes, Social Security taxes, and any other taxes and that the Company and
VitalStream may be required to report its payments to Consultant to taxing
authorities.
(b) Consultant shall act as and be an independent contractor and shall
not be subject to the supervision or control of the Company or VitalStream and
shall generally have control and responsibility for when, where and how the
Services are to be performed, so long as the Services are performed within the
reasonable time constraints set by the Company and
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VitalStream consistent with the needs of the Company and VitalStream for the
Services as contemplated under this Agreement. The Company and VitalStream shall
not have any obligation to provide office space, equipment, support staff,
supplies, or facilities to enable Consultant to perform the Services under this
Agreement (except that the Company and VitalStream shall reimburse Consultant
for all pre-approved travel expenses incurred in connection with the Services).
(c) Consultant shall not be an agent of the Company or VitalStream and
shall have no right or authority to act on behalf, bind or incur any obligations
whatsoever on behalf or in the name of the Company or VitalStream.
(d) In connection with the issuance of any shares of common stock,
$.001 par value, of the Company upon exercise of the Stock Purchase Warrants
attached hereto as EXHIBIT A AND EXHIBIT B (the "WARRANTS"), Consultant shall,
immediately upon notification of the amount due, if any, pay to the Company in
cash or by check amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements. If additional withholding is or becomes
required beyond any amount deposited before delivery of the certificates, the
Optionee shall pay such amount to the Company, in cash or by check, on demand.
If the Optionee fails to pay the amount demanded, the Company may, in its
discretion, withhold a number of shares of common stock with a fair market value
(as reasonably determined by the Company) equal to the amount of any required
withholdings.
6. INVESTMENT REPRESENTATIONS. Consultant represents and warrants to the
Company and VitalStream as follows:
(a) AUTHORIZATION. This Agreement constitutes Consultant's valid and
legally binding obligation, enforceable in accordance with its terms subject to
applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights, and rules of law governing specific performance, and Consultant has full
power and authority to enter into this Agreement.
(b) REPRESENTATIONS NOT MADE BY COMPANY. Consultant represents and
affirms that none of the following information has ever been represented,
guaranteed or warranted to Consultant, expressly or by implication, by any
person: (i) the approximate or exact length of time that Consultant will be
required to remain a security holder of the Company; (ii) the percentage of
profit and/or amount of or type of consideration, profit or loss to be realized,
if any, as a result of an investment in the Company and VitalStream
(collectively, the "MERGING COMPANIES"); or (iii) the possibility that the past
performance or experience on the part of the Merging Companies or any affiliate,
or any officer, director, employee or agent of the foregoing, might in any way
indicate or predict the results of ownership of any Security or the potential
success of the Merging Companies' operations.
(c) FOR OWN ACCOUNT. Consultant is the sole and true party in
interest, is acquiring the Warrants and the shares of common stock, $.001 par
value, of the Company that may be obtained upon exercise of the Warrants (the
"SECURITIES") for its own account for investment, is not purchasing the
Securities for the benefit of any other person, and has no present intention of
holding or managing the Securities with others or of selling, distributing or
otherwise disposing of any portion of the Securities. Consultant is duly
organized and in good
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standing in its jurisdiction of organization and has its principal place of
business in the State of California, and Xxxx X. Xxxxxx is a resident of the
State of California.
(d) DISCLOSURE AND REVIEW OF INFORMATION. Consultant acknowledges and
represents that it has received and reviewed a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001, has been given
a reasonable opportunity to review all documents, books and records of the
Merging Companies pertaining to this investment, has been supplied with all
additional information concerning the Merging Companies and the Securities that
has been requested by Consultant, has had a reasonable opportunity to ask
questions of and receive answers from the Merging Companies or its
representatives concerning this investment, and has had all such questions
answered to the full satisfaction of Consultant. Consultant has received, and
acknowledges that it is receiving, no representations, written or oral, from the
Merging Companies or its officers, directors, employees, attorneys or agents
other than those contained in this Agreement and the written materials provided
by the Merging Companies. In making its decision to purchase the Securities,
Consultant has relied solely upon its review of this Agreement, the written
material provided by the Merging Companies and independent investigations made
by it or its representatives without assistance of the Merging Companies.
(e) SPECULATIVE INVESTMENT. Consultant understands that (i) it must
bear the economic risk of the investment in the Securities for an indefinite
period of time, and (ii) its investment in the Company represented by the
Securities is highly speculative in nature and is subject to a high degree of
risk of loss in whole or in part. Consultant has adequate means of providing for
its current needs and possible contingencies, and is able to bear the high
degree of economic risk of this investment, including, but not limited to, the
possibility of the complete loss of Consultant's entire investment.
ACCREDITED INVESTOR STATUS. Consultant is familiar with the definition
of "accredited investor" within the meaning of Rule 501(a) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and Consultant is an
accredited investor in that Xxxx X. Xxxxxx is either: (i) a natural person whose
individual net worth, or joint net worth with his spouse, at the time of his
purchase exceeds $1,000,000, or (ii) a natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with his spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year,
and in that Brookstreet Securities Corporation is an entity whose equity owners
all satisfy (i) or (ii) above.
(f) RESTRICTED SECURITIES. Consultant understands that the Securities
will be "restricted securities," as defined in Rule 144 under the Securities
Act, and that the Securities may not be sold unless such resale is registered
under the Securities Act or an exemption from the registration requirements is
available. A legend evidencing such restrictions will be placed on all
agreements or certificates representing the Securities.
(g) INVESTMENT EXPERIENCE. Consultant has experience as an investor in
securities and acknowledges that Consultant can bear the economic risk of its
investment in the Securities. By reason of Consultant's business or financial
experience or the business or financial experience of its professional advisors
who are unaffiliated with and who are not
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compensated by the Merging Companies or any affiliate or selling agent of the
Merging Companies, directly or indirectly, Consultant has the capacity to
protect its own interests in connection with its purchase of the Securities.
7. MODIFICATION; WAVIER; DISCHARGE. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by each of the parties hereto. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
8. CONFIDENTIALITY.
(a) Consultant recognizes that during the course of providing the
Services, Consultant shall review, receive and otherwise obtain confidential or
proprietary information and materials from the Merging Companies, including
information relating to inventions, patent, trademark and copyright
applications, improvements, know-how, source code, specifications, drawings,
cost and pricing data, process flow diagrams, bills, customer and vendor lists,
ideas, business plans and/or any written material or electronic storage mediums
referring to or containing same (the "CONFIDENTIAL INFORMATION").
Notwithstanding the foregoing, the Confidential Information shall not include
any information that (i) is made public by an act or omission of the Company,
VitalStream or their authorized representatives, (ii) is received from an
unrelated third party that (after due and reasonable inquiry) Consultant
determines is not bound by an obligation of confidentiality, or (iii) is
required to be disclosed pursuant to a court order (provided that Consultant
shall give the Company five days prior written notice prior to making a
disclosure under this subsection (iii)).
(b) Consultant covenants and agrees that during the term of this
Agreement and forever after its termination or expiration, Consultant (1) shall
not disclose the Confidential Information to any person or entity other than
employees of the Company or VitalStream, as applicable, in the course of
providing the Services, (2) shall not use such Confidential Information for the
benefit of Consultant's own business or for the benefit of any person or entity
other than the Company or VitalStream, and (3) upon request, shall promptly
return to the Company or VitalStream, as applicable, any materials, including
all memoranda, computer disks or other storage media, drawings, patent,
trademark and copyright applications, specifications and process or flow
diagrams, including any copies, notes, or memoranda made by Consultant, that in
any way relate to the Confidential Information.
9. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of Consultant,
VitalStream and the Company. No party may assign this Agreement or the rights
granted hereunder without the prior written consent of the all parties.
10. COMPLETE AGREEMENT. The Company, VitalStream and Consultant
acknowledge that this Agreement, including EXHIBIT A AND EXHIBIT B attached
hereto, contains the full and complete agreement between the parties with
respect to the subject matter contained herein and that there are no oral or
implied agreements or other modifications not specifically set forth
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herein or therein. This Agreement shall supersede and replace all prior
agreements between the Company, VitalStream and Consultant, including, without
limitation, the Original Agreement and the Revised Agreement. Consultant
acknowledges and agrees that, except as may arise under this Agreement, the
Company does not and shall not have any liability or obligation whatsoever to
Consultant, including, without limitation, any liabilities to pay any finders
fee with respect to the Merger, and Consultant hereby releases the Company from
any obligations or liabilities whatsoever other than obligations or liabilities
arising under this Agreement.
11. COUNTERPARTS. This Agreement may be executed in counterparts and by
facsimile, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. HEADINGS. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without regard to its conflicts-of-law principles, and each party
hereby expressly submits themselves to the exclusive, personal jurisdiction of
the courts situate in the State of California, with respect to any and all
claims demands and/or causes of action asserted or filed by any party in any way
relating to, or arising out of, this Agreement or the subject matter hereof.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, Consultant, VitalStream and the Company have executed
this Consulting and Finders Agreement as of the date first above written.
COMPANY:
SENSAR CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Chief Operating Officer
VITALSTREAM:
VITALSTREAM, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: President and CEO
CONSULTANT:
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
BROOKSTREET SECURITIES CORPORATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name:
Title:
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EXHIBIT A
(Stock Purchase Warrant for Xxxx X. Xxxxxx)
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EXHIBIT B
(Stock Purchase Warrant for Brookstreet Securities Corporation)
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EXHIBIT C
(Registration Rights Agreement)
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