CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made and entered into this
15th day of October, 1996, by and among Xxxxxx Financial Corporation, a Texas
corporation ("GFC"), KMG-Bernuth, Inc., a Delaware corporation (the "Client"),
and Xxxxx Xxxxxxx, an individual residing in Texas.
RECITALS
A. KMG desires to enter into a reverse acquisition transaction pursuant
to a Stock Exchange Agreement (the "Stock Exchange Agreement") by and among KMG,
the shareholders of KMG, W.P. Acquisition Corp., a Texas corporation (the
"WPA"), and Halter Financial Group, Inc., a Texas Corporation ("HFG"), whereby
100% of KMG's issued and outstanding capital stock will be exchanged for an
aggregate of approximately 6,510,000 shares of the issued and outstanding common
stock of WPA, resulting in KMG becoming a wholly-owned subsidiary of WPA.
B. GFC has provided and is willing to provide certain consulting services
to KMG with respect to the transactions contemplated by the Stock Exchange
Agreement and certain other related matters on the terms and conditions set
forth in this Agreement.
C. As a result of the transactions contemplated by the proposed Stock
Exchange Agreement, it is anticipated that Xx. Xxxxxxx will become a controlling
shareholder of WPA. Xx. Xxxxxxx enters into this Agreement for the purpose of
making certain agreements with GFC.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. CONSULTING SERVICES. GFC hereby agrees to provide consulting services
to KMG under the terms and conditions set forth in this Agreement as follows:
(i) Finding WPA;
(ii) Advising KMG concerning the structure of the transactions
contemplated by this Agreement;
(iii) Reviewing the form of the Stock Exchange Agreement; and
(iv) Performing additional reasonable services related to the
foregoing subparagraphs (i)-(iii) or as is otherwise contemplated by
this Agreement.
2. PUBLIC COMPANY OBLIGATIONS. Subsequent to the completion of the
transactions contemplated by the proposed Stock Purchase Agreement, Xx. Xxxxxxx
hereby agrees to cause WPA, KMG and any successor corporation thereof to comply
with the obligations of this Agreement.
3. COMPENSATION. As compensation for entering into this Agreement,
Xx. Xxxxxxx hereby agrees to cause WPA to issue to GFC or to the persons or
entities designated by GFC an aggregate of 137,695 shares of its common stock
(the "WPA Shares"). WPA Shares shall have been duly authorized for such
issuance and, when issued and delivered by WPA in accordance with the provisions
of this Agreement, will be validly issued, fully paid and nonassessable.
4. ISSUANCE AND REGISTRATION OF WPA SHARES. The Public Company Shares
will be issued to GFC or the persons and the entities designated by GFC and
registered with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act") under a Registration Statement on Form S-8 as soon as WPA is
eligible to use such Form S-8, or as soon as practicable thereafter. At the
request of KMG, GFC will assist KMG and WPA in the preparation and filing of the
Registration Statement on Form S-8 and all documentation required thereunder.
GFC will also assist KMG and WPA in the preparation of any filings necessary
under state securities laws related to the issuance of such shares.
This Agreement is intended to qualify as an "employee benefit plan" within
the meaning of Rule 405 of Regulation C under the Securities Act. Moreover, it
is intended that WPA Shares be eligible for registration under the Securities
Act on Form S-8. This Agreement shall be interpreted as to so qualify and that
such shares will be so eligible. In particular, notwithstanding any possible
contrary interpretation of any provision of this Agreement, this Agreement is
meant to be and shall be interpreted so that the consulting services which GFC
is obligated to provide hereunder do not include any services in connection with
the offer or sale of securities in a capital-raising transaction. If for any
reason WPA Shares are not eligible for registration under the Securities Act on
Form S-8, GFC may, at its option, prepare and file on behalf of WPA a
registration statement on an appropriate form under the Securities Act. KMG
will assist GFC in its preparation and filing of such registration statement as
GFC may request.
5. EXPENSES. GFC will be responsible for all costs, fees and expenses
that it incurs in connection with the performance of the consulting services
within the scope of Section 1 hereof, provided, however, KMG will be responsible
for its own legal, accounting and other professional fees incurred in connection
with the transactions contemplated by this Agreement.
2
6. ACCURACY OF INFORMATION AND INDEMNIFICATION. KMG agrees to fully
cooperate with GFC in the performance of GFC's consulting services as GFC may
request. In this regard, KMG agrees to furnish to GFC complete, truthful and
accurate information in all respects. KMG agrees to indemnify and hold harmless
GFC from any loss, liability, damages, costs and expenses (including attorneys'
and other professional fees) that GFC may incur as a result of KMG furnishing to
GFC any untruthful or inaccurate information or failing to provide any material
information necessary to make the statements being made or the information being
furnished accurate and truthful in light of all the circumstances.
7. MISCELLANEOUS.
(a) AMENDMENT. This Agreement and the Amended Consulting Agreement of
even date by and among HFG, KMG and Xx. Xxxxxxx amend and supersede that
Consulting Agreement I by and among the Client, HFG, GFC and Xx. Xxxxxxx
and that Consulting Agreement II, by and among the Client, HFG, GFC and
Xx. Xxxxxxx, each dated April 3, 1996.
(b) ASSIGNABILITY. Unless otherwise agreed to in writing by the parties
hereto, the rights, obligations and benefits established by this Agreement
shall be nonassignable by either of the parties hereto and any such attempt
of assignment shall be null and void and of no effect whatsoever.
(c) RELATIONSHIP OF THE PARTIES. The management and employees of GFC
shall not be considered employees of KMG. Furthermore, the parties agree
that GFC shall not be deemed to be an employee, servant, partner or joint
venturer of KMG. GFC shall be considered an independent contractor for all
purposes.
(d) ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties with respect to the subject matter hereof, and may not be
changed except by a writing signed by the party against whom enforcement or
discharge is sought.
(e) WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by any other party.
(f) CONSTRUCTION OF LANGUAGE. The language used in this Agreement shall
be construed as a whole according to its fair meaning, and not strictly for
nor against either party.
(g) CAPTIONS AND HEADINGS. The paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be
3
deemed to define, limit or add to the meaning of any provision of this
Agreement.
(h) STATE LAW. This Agreement, its interpretation and its application
shall be governed by the laws of the State of Texas.
(i) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Execution and
delivery of this Agreement by exchange of facsimile copies bearing
facsimile signature of a party shall constitute a valid and binding
execution and delivery of this Agreement by such party. Such facsimile
copies shall constitute enforceable original documents.
(j) COSTS. In the event of any legal proceeding between any of the
parties to enforce or defend the terms and rights set forth in this
Agreement, the prevailing party or parties shall be paid all reasonable
costs of such legal proceeding, including but not limited to, attorneys'
fees by the other party or parties.
(k) NOTICES AND WAIVERS. Any notice or waiver required or permitted to
be given by the parties hereto shall be in writing and shall be deemed to
have been given, when delivered, three business days after being mailed by
certified or registered mail, faxed during regular business hours of the
recipient and there is confirmation of receipt, or sent by prepaid full
rate telegram to the following addresses:
To KMG:
Xx. Xxxxx Xxxxxxx, President
KMG-Bernuth, Inc.
00000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
To GFC:
Xx. Xxxxxx X. Xxxxxx
Xxxxxx Financial Corporation
000 X. Xxxx Xxx Xxxx, #000
Xxxxxxx, Xxxxx 00000
4
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day first above written.
KMG-BERNUTH, INC.
By: /s/ XXXXX XXXXXXX
--------------------------------
Xxxxx Xxxxxxx, President
/s/ XXXXX XXXXXXX
-----------------------------------
Xxxxx Xxxxxxx, individually
XXXXXX FINANCIAL CORPORATION
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Name: XXXXXXX X. XXXXXX
--------------------------
5
