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EXHIBIT 10.8
XXXXXXXXXX INTERNATIONAL, INC.
13750 U.S. 000 XXXXX, XXXXX 000
XXX XXXXXXX, XXXXX 00000
November 8, 1995
Mr. Xxxxx Xxxx
Managing Director
MSU
000 Xxxxx 0xx Xxxxxx
Witan Gate West
Central Xxxxxx Keynes MK9 1DP
England
Dear Xx. Xxxx:
This engagement letter (the "Agreement") confirms that MSU (the
"Company") has engaged XxXxxxxxxx International, Inc. ("Consultant") to act as
the Company's consultant (other than the circumstance named in Exhibit A) with
respect to certain strategic transactions undertaken by the Company during the
next 6 months, and during any extension thereof by mutual agreement of the
parties (the "Engagement Period").
1. Description of Services. During the Engagement Period, Consultant
will perform such of the following services as the Company may reasonably
request:
(a) Consultant will familiarize itself to the extent it deems
appropriate and feasible with the business, operations, properties,
financial condition, prospects and plans of the Company.
(b) Consultant shall endeavor to introduce the Company to one or
more persons capable of marketing or distributing the Company's
products or technology (collectively, the "Products" ) . In the event
a marketing or distribution arrangement is consummated with a
strategic partner, Consultant shall continue to assist the Company in
its dealings with such strategic partner. In particular, Consultant
shall act as intermediary between the Company and the strategic
partner, and if any controversy arises between the Company and the
strategic partner, Consultant shall assist the Company in its efforts
to settle such controversy. During
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the Engagement Period, the Company shall not contact any person in
Japan or its affiliates (wherever located) concerning potential
strategic transactions regarding the sale or supply of MSU Products
other than through Consultant. During the Engagement Period, the
Company shall refer to Consultant any inquiries regarding such a
possible strategic partnership or marketing and distribution
arrangement involving any persons in Japan or their affiliates
(wherever located).
2. Compensation for Services.
(a) If, during the Engagement Period or during the 12 month period
immediately after termination of the Engagement Period, the Company has
revenues from the marketing or distribution of Products by a person in Japan or
its affiliates (wherever located) first contacted by Consultant with respect to
such an arrangement (or a person in Japan or its affiliates introduced to the
Company, directly or indirectly, by Consultant), then the Company shall pay to
Consultant a fee equal to 5% of such revenues or 10% of the Company's
royalties, whichever applicable, up to but less than $1,000,000 (annually) and
6% of such revenues or 12% of the Company's royalties, whichever applicable,
equal to or greater than $1,000,000 (annually) for the 7 year period beginning
on the first month in which said revenues accrue. Additionally, if during the
Engagement Period or during the 12 month period immediately after termination
of the Engagement Period, the Company has received fees from up-front research
and development payments (including joint venture or collaboration payments),
relating to the Products to be distributed or marketed into Japan or its
affiliates (wherever located) first contacted by Consultant with respect to
such an arrangement (or a person in Japan or its affiliates introduced to the
Company, directly or indirectly, by Consultant), the Company shall pay
Consultant a fee equal to 7.5% of the receipt of all such up-front fees.
Furthermore, if during the Engagement Period or during the 12 month period
immediately after termination of the Engagement Period, the Company has
received fees from licensing (or outright sale), relating to the Products to be
distributed or marketed into Japan or its affiliates (wherever located) first
contacted by Consultant with respect to such an arrangement (or a person in
Japan or its affiliates introduced to the Company, directly or indirectly, by
Consultant), the Company shall pay Consultant a fee equal to 10% of the receipt
of all such fees. In each and every case, all aforementioned fees/revenues
shall be payable on a monthly basis within the thirty day period following the
end of the month in which the revenues accrue. It is the intention of the
parties that Consultant be compensated in the event the Company receives fees
and/or revenue as a direct or indirect consequence of Consultant's efforts.
Consultant's obligation to provide services pursuant to Section 1 is contingent
upon timely payment of the fees described in Section 2. Consultant will have
the right to audit, no more than once per 12-month period, the Company's books
and records to confirm the accuracy of the compensation or fees payable
hereunder. The out-of-pocket expenses of such audit shall be borne by
Consultant unless such
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audit identifies a discrepancy of at least 5% between the amount actually paid
to Consultant hereunder and the amount which should have been paid hereunder,
in which case the expenses of such audit shall be borne by the Company.
(b) During the first two and a half (2.5) years of the Engagement
Period, at the closing of the first Transaction(s) that results in the payment
or cumulative payment of revenues/fees pursuant to Section 2(a), the Company
shall issue to Consultant transferable warrants ("Warrants") which only entitle
the holder thereof to purchase 75,000 shares of common stock of the Company per
$1,000,000 of revenues/fees (i.e. 150,000 shares for $2,000,000, 225,000 shares
for $3,000,000 etc.), up to a maximum of 750,000 shares for $10,000,000 of
revenues/fees. Additionally, the Company shall issue to Consultant another
250,000 warrants as a bonus (for a total issuance of 1,000,000 warrants) in the
event of $20,000,000 of revenues/fees. For only as long as the Company is a
research and development concern, and not a manufacturing business, then the
revenues/fees will be defined as follows: a) Product Sales; revenues are based
on gross margin (gross margin is revenue from product sales less cost of
sales), and b) All Other Revenues/Fees (i.e. Licensing, Research and
Development Projects, Royalties, etc.); revenues/fees are based on the actual
revenues/fees. All of the aforementioned warrants shall be issued by the
Company, to Consultant, after giving effect to the consummation of such
Transaction(s), on a fully-diluted basis (assuming the issuance of the maximum
number of shares of common stock issuable upon the exercise of warrants issued
hereunder, the exercise of outstanding warrants, options and other rights to
purchase common stock, and the conversion or exchange of outstanding securities
convertible into or exchangeable for, common stock). The Warrants shall be
exercisable, in whole or in part, at any time during the 5 year period
following the closing of such Transaction(s), at a per share exercise price
equal to the LESSER OF 50% of the market price of the Company's common stock at
that time OR $10 per share (subject to appropriate adjustment for stock splits,
stock dividends and other similar capital changes, and all other customary
weighted average anti-dilution adjustments). The Warrants and shares issuable
upon exercise of the Warrants shall carry normal, full registration rights.
3. Expenses/Retainer. The Company shall pay to Consultant a
non-accountable expense allowance in the amount of $2,500 per month payable
beginning on the first day of the third monthly period of the Engagement Period
and on the first day of each monthly period during the Engagement Period
thereafter.
4. Use of Information About the Company.
(a) Consultant is authorized to transmit to any of the Exclusive
Contacts a copy or copies of any business plan, forms of agreements and any
other documentation supplied to Consultant
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expressly for transmission to any of the Exclusive Contacts by or on behalf of
the Company. Except in connection with its services hereunder, Consultant
shall not make use of the Information and shall keep the Information
confidential except to the extent that: (i) the Information is or becomes
publicly available (otherwise than through disclosure by Consultant), (ii)
disclosure is required by law or requested by any governmental agency or
regulatory body, or (iii) the Information is disclosed to Consultant by a
source other than the Company or its agents.
(b) Confidential information means all unpatented designs,
drawings, data specifications, manufacturing processes, testing procedures and
all other technical business and similar information relating to the Company
and its products including all readable computer or other machine readable data
logic, logic diagrams, flow charts, coding, listings, test data or routines,
diagnostic programs or other material relating to or comprising software or
hardware, together with all patent rights and applications, copyrights and
design rights registerable or otherwise. The Consultant acknowledges that it
will have access to commercially sensitive information of the Company which is
confidential and proprietary to the Company. The Consultant agrees to keep and
to ensure that its personnel shall keep the confidential information and all
other matters arising or coming to its attention in connection with the
confidential information secret and confidential and not at any time for any
reason whatsoever to disclose it or permit it to be disclosed to any third
party except that is permitted hereunder to enable the Consultant to carry out
its duties and obligations.
5. Conditions of Transaction. Consultant's services to be
performed hereunder are subject to certain conditions, including (i)
satisfactory completion of due diligence by Consultant, (ii) the form and
terms of the strategic partnership being mutually acceptable to the Company and
Consultant, and (iii) the absence of a material adverse change in the
condition of the Company.
6. Press Announcements. At any time after the consummation or
public announcement of a strategic partnership, and with the prior written
approval of the Company (which approval shall not be unreasonably withheld or
delayed), Consultant may place an announcement in such newspapers and
publications as it may choose, stating that Consultant has acted as consultant
in connection with the transaction.
7. Indemnification. The Company agrees to indemnify and hold
harmless Consultant and its affiliates, and their directors, employees, and
agents, and their respective successors, legal representatives an assigns
(Consultant and each such person, including their successors, legal
representatives and assigns, being referred to herein as an "Indemnified
Person"), from and against all claims, liabilities, losses and damages related
to or arising out of (i) actions taken or omitted to be taken (including
statements made or omitted to be made in any materials regarding the Company)
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by the Company or an affiliate of the Company or a director, employee, agent
or representative thereof (other than an Indemnified Person) or (ii) the breach
of any representation or warranty of the Company contained in the Engagement
Letter; and the Company will reimburse each Indemnified Person for all
expenses (including reasonable attorneys' fees) as they are incurred in
connection with the investigation, preparation, and defense of any such claim
or action, whether or not the Indemnified Person is or is threatened to be a
party thereto. No Indemnified Person shall have any liability to the Company,
or a director, employee, agent or representative thereof in connection with the
services rendered pursuant to the Engagement Letter except for claims,
liabilities, losses, damages and expenses which arise from the Consultant's
failure to fulfill its obligations pursuant to the terms of the Engagement
Letter.
8. Representations and Warranties of the Company. The Company
represents and warrants to Consultant that this Agreement has been duly
authorized, executed and delivered by the Company, does not conflict with any
other agreement to which the Company is a party, and constitutes a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms. The Company represents that, to the best of its
knowledge, the Information (including any offering materials) will not, when
delivered and at the closing of the Transaction, contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. The Company agrees to advise Consultant promptly of the
occurrence of any event or any other change prior to the closing known to it
which results in the Information containing any untrue statement of a material
fact or omitting to state any material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which they
were made.
9. Termination. The Engagement Period may be terminated by
either party for any reason (prior to the termination of the period set forth
in the introductory paragraph hereof) upon written notice to the other party.
10. Survival of Certain Provisions. The Company's obligations
under Sections 2, and 7, and the Company's representations under Section 8,
shall remain in full force and effect and shall not be affected by (i) any
investigation made by or on behalf of Consultant, (ii) consummation of a
strategic partnership, or (iii) termination of this Agreement. The Company's
obligations under Section 3 shall remain in full force and effect and shall not
be affected by (i) any investigation made by or on behalf of Consultant, or
(ii) consummation of a strategic partnership. Mutual obligations of both the
Company and the Consultant under Section 4 shall remain in full force and
effect and shall not be affected by (i) any investigation made by or on behalf
of either the Company or Consultant, or (ii) consummation of a strategic
partnership, or (iii) termination of this Agreement.
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11. General. This Agreement may be amended only by the written
agreement of each party hereto. The parties acknowledge and agree that
Consultant is an independent contractor of the Company and is not an affiliate,
partner, joint venturer or agent of the Company. This Agreement may not be
assigned by the Company and may be assigned by Consultant only with prior
written consent of the Company (which would not be unreasonably withheld) and
only to Advisor's affiliates or another entity organized or acquired by Xxxx
XxXxxxxxxx for the purpose of providing consulting services. Subject to the
restrictions on assignment contained herein, the provisions of this Agreement
shall be binding on and inure to the benefit of each party hereto, and such
party's successors, personal representatives and assigns. This Agreement sets
forth the entire understanding between the parties hereto concerning the
subject matter contained herein, and supersedes all prior discussions and
agreements. In the event that any provision of this Agreement is held to be
unenforceable or invalid by any court of competent jurisdiction, the validity
and enforceability of the remaining provisions shall not be affected thereby.
As used herein, the term "person" shall include all natural persons,
corporations, trusts, partnerships, joint ventures, associations and other
entities. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument. This Agreement shall be governed by the laws of the State
of Texas.
Please sign and return one copy of this letter to the undersigned to
indicate your acceptance of the terms set forth herein, whereupon this letter
shall constitute a binding agreement between you and the undersigned as of the
date first above written.
Sincerely,
XxXXXXXXXX INTERNATIONAL, INC.
By: /s/ XXXX XxXXXXXXXX
-----------------------------------------
Xxxx XxXxxxxxxx, President
Accepted and Agreed:
MSU
By: /s/ XXXXX XXXX
-----------------------------------
Xxxxx Xxxx, Managing Director
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EXHIBIT A
1). Matsushita with specific regard to the "Envoy" chip ONLY.
2). Fujitsu with specific regard to the "Minstrel" product discussions via
ICL.
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February 5, 1996
Mr. Xxxxx Xxxx
Managing Director
MSU
000 Xxxxx 0xx Xxxxxx
Witan Gate West
Central Xxxxxx Keynes MK9 1DP
England
Dear Xx. Xxxx:
Pursuant to the Engagement Letter dated November 8, 1995 (the "Engagement
Letter) between XxXxxxxxxx International, Inc. ("Consultant") and MSU (the
"Company"), The Company has engaged Consultant to act as the Company's
consultant in connection with certain strategic transactions. The purpose of
this letter is to amend certain provisions of the Engagement Letter as follows:
ITEM 1
In order to correct an inadvertent limitation contained in Section 2(b) of the
Engagement Letter, the words "the first" which appear in the second line of the
first sentence of such section are hereby deleted (so that there is no
misunderstanding that the number of Warrants to received by Consultant shall be
based on the cumulative revenues/fees received from all Transactions during
each year), and the reference to Section 2(b) appearing the third line of that
sentence is hereby changed to Section 2(a).
ITEM 2
The word "Advisor's" appearing in the third sentence of Section 11 of the
Engagement Letter is hereby changed to the term "Consultant (in order to be
made consistent with the other provisions of the Engagement Letter).
All other terms of the Engagement Letter are hereby ratified and affirmed. To
the extent that any term contained in this Amendment is inconsistent with the
Engagement Letter, this Amendment shall control and the Engagement Letter shall
be deemed modified.
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Please sign and return one copy of this letter to the undersigned to indicate
your acceptance of the terms set forth herein, whereupon this letter shall
constitute a binding amendment to the Engagement Letter as of the date first
above written.
Sincerely,
XxXXXXXXXX INTERNATIONAL, INC.
By: /S/ XXXX XxXXXXXXXX
----------------------------------------
Xxxx XxXxxxxxxx, President
Accepted and Agreed:
MSU
By: /S/ XXXXX XXXX
--------------------------------------
Xxxxx Xxxx, Managing Director
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May 8, 1996
Xx. Xxxxxxx Xxxxxxxx
Chairman
MSU
526-528 Elder Gate
Central Xxxxxx Keynes, Bucks
MK9 1LR
England
Dear Xx. Xxxxxxxx:
Pursuant to the Engagement Letter dated November 8, 1995, Amendment Number 1
dated February 5, 1996, Amendment Number 2 dated February 8, 1996, and
Amendment Number 3 dated March 28, 1996 (the "Engagement Letter) between
XxXxxxxxxx International, Inc. ("Consultant") and MSU (the "Company"), The
Company has engaged Consultant to act as the Company's consultant in connection
with certain strategic transactions. The purpose of this Fourth Amendment to
the Engagement Letter ("Amendment") is to extend the term of the Engagement
Period and nullify Amendment Number 2 dated February 8, 1996 and Amendment
Number 3 dated March 28, 1996. Capitalized terms used, but not defined, in
this Amendment, shall have the meanings assigned to them in the Engagement
Letter.
THE ENGAGEMENT LETTER IS HEREBY AMENDED AS FOLLOWS:
ITEM 1
The Company and Consultant hereby mutually agree to extend the term
Engagement letter dated November 8, 1996, as amended, for an
additional period of 6 months, and during any extension thereof by
mutual agreement of the parties.
ITEM 2
Amendment Number 2 dated February 8, 1996 and Amendment Number 3 dated
March 28, 1996 are hereby rescinded as part of the Engagement Letter
dated November 8, 1995.
All other terms of the Engagement Letter are hereby ratified and affirmed. To
the extent that any term contained in this Amendment is inconsistent with the
Engagement Letter, this Amendment shall control and the Engagement Letter shall
be deemed modified.
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Please sign and return one copy of this letter to the undersigned to indicate
your acceptance of the terms set forth herein, whereupon this letter shall
constitute a binding amendment to the Engagement Letter as of the date first
above written.
Sincerely,
XxXXXXXXXX INTERNATIONAL, INC.
By: /s/ XXXX XxXXXXXXXX
-----------------------------------------
Xxxx XxXxxxxxxx, President
Accepted and Agreed:
MSU
By: /S/ XXXXXXX XXXXXXXX
--------------------------------
Xxxxxxx Xxxxxxxx, Chairman
