Exhibit 10.11
CONSULTING AGREEMENT
AGREEMENT made effective as of October 1, 1997 (the "Agreement") between
Broadland Capital Partners ("Broadland") having an office at 00000 Xxxxxxxx
Xxxxxxx Xxxxxx, Xxxxx Xxxxxx Xxxxx, Xxxxxxx 00000 and Xxxx Systems Inc. (the
"Company") having an office at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx
00000 as follows:
WHEREAS, in entering into this Agreement, the Company intends to enhance
its ability greatly to achieve three important corporate goals (collectively
hereinafter referred to as the "Goals") as follows:
(a) to become a publicly owned company either through an initial public
offering of shares (the "IPO") or a merger with an already public
entity, (or otherwise) within twelve (12) months after the date of
this Agreement (the "First Goal");
(b) to successfully increase the value of its shares when publicly owned
to a point where, in any ten day period within twenty-four (24) months
after the shares of the Company become publicly owned, the average
price per share of the publicly owned shares over such ten (10) day
period is two hundred percent (200%) of the initial public price of
such shares (the "Second Goal"); and
(c) within twenty-four (24) months after the shares of the Company become
publicly owned, to acquire entities having an aggregate annual revenue
of Fifteen Million Dollars ($15,000,000) (the "Third Goal").
N.B. The Second and Third Goals are not sequential and have no
chronological priority between them, though it obviously would be
preferable to have the stock price as high as possible prior to
engaging in acquisitions.
WHEREAS, Broadland, through its principal, Xxxxxx Xxxxx, has the capability
and experience to significantly contribute to the achievement of the Company's
Goals;
WHEREAS, in view of such capability and experience, the Company wishes to
engage the services of Broadland, and, therefore, through Broadland its
principal, Xxxxxx Xxxxx, upon the following terms and conditions;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the parties hereto, Broadland and
the Company agree as follows:
1. Broadland, through its principal, Xxxxxx Xxxxx, will provide the
following services (the "Services") to the Company and its Chief
Executive Officer:
SERVICES
- Identify and assist the Chief Executive Officer in the selection of
appropriate investment banking firms.
- Assist the Chief Executive Officer with the IPO Project Management
Process.
- Introduce additional market makers and research analysts subsequent to
the IPO.
- Assist the Chief Executive Officer with selection of; the building of
relationships, and the negotiations with potential acquisitions.
- Continue other services as requested by the Chief Executive Officer.
2. COMPENSATION TO BROADLAND FOR THE SERVICES:
PRE IPO (OR OTHER MANNER OF GOING PUBLIC)
From October 1, 1997 until the Company becomes a publicly owned entity,
Broadland shall receive a monthly fee of Five Thousand Dollars ($5,000) payable
on the last day of each month together with reimbursement of out-of-pocket
expenses (hotel, airfare, etc.) approved in writing in advance by the Chief
Executive Officer of the Company. The Five Thousand Dollar ($5,000) fee shall
cease when the Company becomes a publicly owned entity, and this Agreement as
well as said fee may be canceled upon thirty (30) days written notice by the
Company to Broadland at any time in the Company's sole discretion prior to the
Company becoming a publicly owned entity.
SUBSEQUENT TO IPO (OR OTHER MANNER OF GOING PUBLIC)
Providing that this Agreement has not been canceled and that Broadland, through
its principal, Xxxxxx Xxxxx, has performed the Services, and, in particular, has
significantly contributed to the Company's becoming a publicly owned entity
within twelve (12) months after the date of this Agreement, Broadland shall
receive the following compensation from the Company:
(a) CASH: an advisory fee of Three Thousand Dollars ($3,000) per month
payable on the last day of each month after the Company has become a
publicly owned entity until the fourth anniversary of this Agreement
for continuing to provide the Services and, in particular, for
significantly participating in the effort to achieve the Second and
Third Goals. In addition, Broadland will continue to receive
reimbursement of out-of-pocket expenses (hotel, airfare, etc.)
approved in writing in advance by the Chief Executive Officer of the
Company.
(b) WARRANTS:
(i) In addition to the monthly advisory fee, warrants, in the form
of Exhibit A attached hereto (the "Warrants") to purchase shares
of the Company's common stock at an exercise price of $3.50 per
share (the "Warrant Price").
(iii) NUMBER OF WARRANTS: This Warrant grants to Broadland the right
to purchase up to 210,000 shares of the Company's common stock
at the Warrant Price if the aggregate outstanding number of
shares equals three
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(3) million to five (5) million shares at the time the Company
becomes a publicly owned entity and up to 300,000 shares if the
aggregate outstanding number of shares exceeds five (5) million
shares at such time.
(iii) THE WARRANTS SHALL VEST AS FOLLOWS:
(a) This Warrant shall first have force, life and effect at the
time when the Company shall first become a publicly owned
entity either through an IPO or a merger with an already
public entity or otherwise;
(b) At the time the Company achieves its First Goal, one-third
(1/3) of the Warrant, or a Warrant to purchase 66,666 or
100,000 Stock Units, (as the case may be subject to
subsection (ii) above) shall vest immediately;
(c) at the time the Company achieves its Second Goal, an
additional one-third (1/3) of the Warrant, or a Warrant to
purchase an additional 66,666 or 100,000 Stock Units, as
the case may be, shall vest immediately; and
(d) at the time the Company achieves its Third Goal, an
additional one-third (1/3) of the Warrant or a Warrant to
purchase an additional 66,667 or 100,000 Stock Units, as
the case may be, shall vest immediately.
(iv) The Warrants must be exercised within five (5) years after they
vest or, thereafter, they shall expire and become null and void.
4. TERM:
After the date that the Company first becomes a publicly owned entity, this
Agreement shall terminate automatically upon the first to occur of the
following:
(a) The date October 1, 2001;
(b) if Broadland ceases to provide the Company with the
services of Xxxxxx Xxxxx;
(c) the death of Xxxxxx Xxxxx; or
(d) the commencement of the permanent disability of Xxxxxx
Xxxxx.
For purposes of the foregoing, the term "permanent disability" shall mean
the inability of Xxxxxx Xxxxx due to illness, accident or any other
physical or mental impairment to perform his duties hereunder (which
include limited and reasonable services requested by the Company) in a
normal manner for a period of three (3) months, whether or not consecutive,
in any twelve (12) month period during the term of this Agreement.
Warrants which shall have vested shall be exercisable by Xxxxxx Xxxxx or in
the event of his death by the estate or heirs of Xxxxxx Xxxxx, despite the
termination of this Agreement. Upon the termination of this Agreement, any
Warrants remaining unvested shall expire and become null and void.
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4. INDEPENDENT CONTRACTOR:
The Company and Broadland agree and acknowledge that in the
performance of this Agreement, or any part thereof, Broadland and
Xxxxxx Xxxxx shall together act as an independent contractor and not
as the agent, servant, employee or representative of the Company. No
other direction or control, except as specifically set forth herein,
shall be exercised by the Company over the performance of the work of
Broadland or Xxxxxx Xxxxx. Neither Broadland nor Xxxxxx Xxxxx shall
have any right in, or claim to, any Company employee benefits and
neither is a Company employee. Except as authorized in advance by the
Chief Executive Officer of the Company, neither Broadland nor Xxxxxx
Xxxxx shall have any authority to bind or obligate the Company in any
manner, nor shall Broadland or Xxxxxx Xxxxx commence negotiations on
behalf of the Company with any third party.
5. NON ASSIGNMENT:
Broadland may not assign its rights or delegate its duties under this
Agreement without the prior written consent of the Chief Executive
Officer of the Company and any assignment or delegation in
contravention of this obligation shall be void.
6. DISCLOSURES:
Neither Broadland nor Xxxxxx Xxxxx shall disclose to any one outside
of the Company nor use for any purpose other than the business of the
Company, any confidential information, inventions, trade secrets, or
materials, without first obtaining the written permission of the Chief
Executive Officer of the Company during the term of this Agreement and
at all times thereafter.
7. MISCELLANEOUS:
This Agreement contains the entire understanding of the parties, and
there are no representations, warranties, promises, covenants or
agreements except as specifically set forth herein.
8. GOVERNING LAW:
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware without regard to
its conflict of law rules. The parties hereby agree to submit
themselves to the exclusive jurisdiction and venue of the Superior
Court of Orange County with respect to any dispute or interpretation
arising out of or in connection with this Agreement.
Broadland Capital Partners Xxxx Systems Inc.
BY: /s/ Xxxxxx Xxxxx BY: /s/ Xxxxxxx X. Xxxx
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Xxxxxx Xxxxx, President Chief Executive Officer
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Individually
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WARRANT
[Included as Exhibit 4.1 of this Registration Statement]
EXHIBIT A
