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EXHIBIT 10.39
CLIENT SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 15th day of April, 1998 between
CONTINENTAL CAPITAL & EQUITY CORPORATION, located at 000 Xxxxxx Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxx, XX 00000, hereinafter sometimes referred to as (CCEC) and
XXSYS TECHNOLOGIES, INC., located at 0000 Xxxxxxxxx Xxxxxx, Xxx Xxxxx, XX
00000-0000, hereinafter sometimes referred to as (the "Company").
WITNESSETH:
WHEREAS, CCEC is a public relations and direct marketing advertising firm
specializing in the dissemination of information about publicly traded
companies, and WHEREAS, the Company is publicly held with its common stock
trading on NASDAQ, and WHEREAS, the Company desires to publicize itself with the
intention of making its name and business better known to its shareholders,
investors, and brokerage houses, and WHEREAS, CCEC is willing to accept the
Company as a client.
NOW THEREFORE, in consideration of the mutual covenants herein contained, it is
agreed:
1. ENGAGEMENT: The Company hereby engages CCEC to publicize the Company to
brokers, prospective investors and shareholders described in Section 2 of this
Agreement, and subject to the further provisions of this Agreement. CCEC hereby
accepts the Company as a client and agrees to publicize it as described in
Section 2 of this Agreement, but subject to the further provisions of this
Agreement.
2. MARKETING PROGRAM: Consists of the following components:
(A) CCEC will review and analyze all aspects of the Company's goals and
make recommendations on feasibility and achievement of desired goals.
(B) CCEC will review all of the general information and recent filings
from the Company and produce and mail up to 100,000 piece direct mail package to
include an 11" X 17" self mailer and an ample number of corporate profiles and
presidential letters so as to allow for one profile and one letter for each
respondent to the original mailing. Profiles will be prepared in brokerage style
format, all items to be approved in writing by the Company prior to circulation.
(C) CCEC will provide through its extensive network, firms and brokers
interested in participating in the retail distribution of the common stock of
XXSYS and schedule and conduct the necessary due diligence and obtain the
required approvals necessary for those firms to participate. CCEC will also
interview and make determinations on any firms or brokers referred by the
Company with regard to their participation.
(D) CCEC will be available to the Company to field any calls from firms,
investors and brokers inquiring about the Company.
(E) For the duration of this Agreement, CCEC will feature the Company on
its Internet site, xxx.xxxxxxxxxxxxxxxx.xxx and will purchase advertising space
on other high traffic web sites so as to create a minimum of 500,000 hits for
the benefit of the Company.
3. TIME OF PERFORMANCE: Services to be performed under this Agreement shall
commence upon execution of this Agreement and shall continue for two years.
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4. COMPENSATION AND EXPENSES: In consideration of the services to be performed
by CCEC, the Company agrees to a unique compensation package which is payable as
follows:
1. STOCK: Upon meeting certain milestones as described below, CCEC shall
be entitled to receive from the Company and/or its designee, Three Hundred
Thousand (300,000) shares of freely trading common stock and an option to
purchase 50,000 shares at $2.00 per share and an option to purchase 50,000
shares at $3.00 per share. These shares shall be escrowed at Prudential
Securities, La Jolla Branch, California, and subject to repurchase by XXsys
and/or its designee. CCEC agrees to give the Company irrevocable proxies to vote
these shares until they are repurchased or sold.
2. ESCROW: CCEC agrees to escrow shares as follows:
(a) Two Hundred Thousand (200,000) shares shall be placed in escrow
for a period of thirty (30) days and shall be released upon XXsys(1)s approval
of work performed. Upon release from escrow, these shares shall be subject to a
30-day repurchase by the Company and/or its designee. If the common stock has
traded at an average bid price of $1.00 or higher for a consecutive 15 trading
days, the repurchase price will be $1.00 per share. If the stock has traded at
an average bid price of less than $1.00 for a consecutive of 15 trading days,
the repurchase price will be $0.50 or market, whichever is less.
(b) One Hundred Thousand (100,000) shares shall be placed in escrow
for a period of ninety (90) days and shall be released upon XXsys(1)s approval
of work performed. Upon release from escrow, these shares shall be subject to a
30-day repurchase by the Company and/or its designee. If the common stock has
traded at an average bid price of $3.00 or higher for a consecutive of 30
trading days, the repurchase price will be $3.00 per share. If the stock has
traded at an average bid price of less than $3.00 for a consecutive of 30
trading days, the repurchase price shall be $0.50 or market, whichever is less.
3. OPTION: CCEC shall be issued a one-year option by the Company and/or
its designee to purchase a total of 100,000 shares of freely trading common
stock. The exercise price and vesting schedule of said options are as follows:
(a) When the Company(1)s common stock trades at $10.00 per share
for 30 consecutive days, an option for 50,000 shares shall vest and CCEC shall
be entitled to purchase 50,000 shares of freely trading common stock at $2.00
per share. These shares shall be subject to a repurchase agreement by the
Company and/or its designee at a 20% discount to the average bid price for the
30 days preceding the day of repurchase.
(b) When the Company(1)s common stock trades at $15.00 per share
for 30 consecutive days with a trading volume of 300,000 shares per day, the
option for the remaining 50,000 shares shall vest and CCEC shall be entitled to
purchase 50,000 shares of freely trading common stock at $3.00 per share. These
shares shall be subject to a repurchase agreement by the Company and/or its
designee at a 20% discount to the average bid price for the 30 days preceding
the day of repurchase.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND CCEC: The Company and CCEC
represent and warrant to each other, each such representation and warranty being
deemed to be material that:
(A) The Company will cooperate fully and timely with CCEC to enable CCEC
to perform its obligations under this Agreement.
(B) The execution and performance of this Agreement by the Company and
CCEC have been duly authorized by the Board of Directors of both parties in
accordance with applicable law, and, to the extent required, by the requisite
number of shareholders of the Company and CCEC.
(C) The performance by the Company and CCEC of this Agreement will not
violate any applicable court decree, law or regulation, nor will it violate any
provisions of the organizational documents of both parties or any contractual
obligation by which the parties may be bound.
(D) The Company will promptly deliver to CCEC a complete due diligence
package to include latest 10K, latest 10Q, last 6 months of press releases and
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all other relevant materials, including but not limited to corporate reports,
brochures, etc.
(E) Because CCEC will rely on such information to be supplied it by the
Company, all such information shall be true, accurate, complete and not
misleading, in all respects.
(F) The Company will act diligently and promptly in reviewing materials
submitted to it by CCEC to enhance timely distribution of the materials and will
inform CCEC of any inaccuracies contained therein prior to the projected
publication date.
6. DISCLAIMER BY CCEC: CCEC WILL BE THE PREPARER OF CERTAIN PROMOTIONAL
MATERIALS. CCEC MAKES NO REPRESENTATION THAT (A) ITS SERVICE WILL RESULT IN ANY
ENHANCEMENT TO THE COMPANY (B) THE PRICE OF THE COMPANY'S PUBLICLY TRADED
SECURITIES WILL INCREASE, (C) ANY PERSON WILL PURCHASE SECURITIES IN THE
COMPANY, OR (D) ANY INVESTOR WILL LEND MONEY TO OR INVEST IN OR WITH THE
COMPANY.
7. TERMINATION: If the Company fails to cooperate with CCEC, or fails to make
timely payment of the compensation set forth in section 4 of this agreement CCEC
shall have the right to terminate any further performance under this Agreement.
If the Company desires to make a tender offer for its publicly traded shares and
take it private, the Company shall have the right to terminate any further
performance of this Agreement. In such events all earned compensation shall
become immediately due and payable and/or deliverable, and CCEC shall be
entitled to receive and retain the same as liquidated damages, and not as a
penalty, in lieu of all other remedies, the parties acknowledging and agreeing
that it would be too difficult currently to determine the exact extent of CCEC's
damage, but that the receipt and retention of such compensation is reasonable
present estimate of such damage.
8. LIMITATION OF CCEC LIABILITY: If CCEC fails to perform its services
hereunder, its entire liability to the Company shall not exceed the lessor of
(a) the amount of cash compensation CCEC has received from the Company under
Section 4 of this agreement or (b) the actual damage to the Company as a result
of such non-performance. IN NO EVENT WILL CCEC BE LIABLE FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM AGAINST THE COMPANY BY ANY
PERSON OR ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT.
9. OWNERSHIP OF MATERIALS: All right, title and interest in and to materials to
be produced by CCEC in connection with the contract and other services to be
rendered under this Agreement shall be deemed the sole and exclusive property of
the Company. The Company agrees not to reproduce or otherwise distribute any
material containing Inside Wall Street logos or CCEC references, after the
termination of this Agreement without CCEC(1)s written consent.
10. CONFIDENTIALITY: Until such time as the same may become publicly known, CCEC
agrees that any confidential nature will not be revealed or disclosed to any
person or entity, except in the performance of this Agreement, and upon
completion of its services and upon written request of the Company all
materials, original documentation provided by the Company will be returned to
it. CCEC will, however, require Confidentiality Agreements from its own
employees and from contractors CCEC reasonably believes will come in contact
with confidential material.
11. NOTICES: All notices hereunder shall be in writing and addressed to the
party at the address herein set forth, or at such other address as to which
notice pursuant to this section may be given, and shall be given by personal
delivery, by certified mail, express mail or by national overnight courier
services. Notices will be deemed given upon the earlier of actual receipt or
three (3) business days after being mailed or delivered to such courier service.
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Notices shall be addressed to CCEC at:
Suite 200
000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
and to the Company at:
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Any notices to be given hereunder will be effective if executed by and sent by
the attorneys for the parties giving such notice.
12. SEPARABILITY: If one or more of the provisions of this Agreement shall be
held invalid, illegal, or unenforceable in any respect, such provision, to the
extent invalid, illegal, or unenforceable, and provided that such provision is
not essential to the transaction provided for by this Agreement, shall not
affect any other provision hereof, and the Agreement shall be construed as if
such provision had never been contained herein.
13. MISCELLANEOUS:
(A) EFFECTIVE DATE OF REPRESENTATIONS: Shall be no later than the date
CCEC is prepared to distribute letters and/or brochures pursuant to the
contract.
(B) GOVERNING LAW: This Agreement shall be governed by and interpreted
under the laws of the State of Florida where CCEC has been organized and this
Agreement has been accepted by CCEC.
(C) CURRENCY: In all instances, references to dollars shall be deemed to
be United States Dollars.
(D) MULTIPLE COUNTERPARTS: This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original.
Executed as a sealed instrument as of the last day and year shown hereunder.
CONFIRMED AND AGREED ON THE 16TH DAY OF APRIL, 1998
CONTINENTAL CAPITAL & EQUITY CORPORATION
By: /s/ XXXXX X. XXXXXX /s/ XXXX XXXXXX
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CCEC Representative CCEC Officer
/s/ XXX X'XXXXX /s/ XXXXXX X. XXXXXX
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Witness Witness
CONFIRMED AND AGREED ON THE 16TH DAY OF APRIL, 1998
XXSYS TECHNOLOGIES, INC.
By: /s/ GLORIA C.L. MA, /s/ XXXXXXX X. XXXXXX
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Duly Authorized Witness
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