STOCK COMPENSATION AGREEMENT
THIS AGREEMENT, is made effective September 25, 2000, and is between
ProCare Industries, Ltd. ("Company") and Xxxxxx X. Xxxxxx, President ("Xxxxxx")
and is made with reference to the following agreed facts:
A. The Company is a publicly owned corporation in good standing under
applicable state and federal securities and corporate law. The Company has no
present assets with which to pay its accumulated and ongoing expenses and
obligations.
B. The Company, through its Board of Directors, since 1999 has endeavored
to seek and consummate a suitable acquisition transaction pursuant to which the
Company will acquire the assets and business of one or more privately-owned
businesses, such that the Company would become an operating entity, thereby
providing the private business with the structure of a publicly-owned
corporation and providing liquidity and value to the present shareholders of the
Company.
C. In July 1999, the Company entered into a Funding Agreement with Xxxxxx,
which agreement was modified slightly and replaced with the Revised Funding
Agreement. Under the Revised Funding Agreement, the Company agreed to pay to
Xxxxxx a contingent payment of $150,000 upon completion of an acquisition
transaction by the Company and Xx. Xxxxxx agreed to remain as an officer and the
President of the Company through the earlier of completion of an acquisition
transaction or July 2000, and Xxxxxx also agreed to advance, on behalf of the
Company, payment of the Company's liabilities and obligations incurred during
the term of the Agreement, if the Company was unable to satisfy from other
sources.
D. In late 1999, the Company entered into a letter of intent with FastPoint
Communications, Inc., a Delaware corporation ("FastPoint"), pursuant to which
the Company and FastPoint indicated their mutual intention to structure and
complete an acquisition transaction pursuant to which the stockholders of
FastPoint would acquire control of the Company. After a number of delays by
FastPoint, an Agreement and Plan of Merger ("Merger Agreement") between the
Company and FastPoint was signed August 14, 2000 which required the acquisition
transaction and the merger of FastPoint with and into a newly-formed subsidiary
of the Company to be completed by September 15, 2000 or the Company would have
the right to terminate the Merger Agreement with FastPoint. FastPoint took no
material action to meet the conditions established by FastPoint in the Merger
Agreement and the acquisition transaction described in the Merger Agreement has
not been completed. FastPoint has requested that the Company continue to pursue
the merger with FastPoint.
E. Since the effective time of the Revised Funding Agreement, the Company
has received some funds from FastPoint as described in the Merger Agreement. The
Company has used all funds it has received, including amounts received as
payment for securities issued by the Company, to pay ongoing expenses of the
Company and to make certain advances to Xxxxxx in anticipation that the merger
transaction with FastPoint would be completed.
X. Xxxxxx has not received the compensation contemplated by the Revised
Funding Agreement and the Company's expenses incurred since the effective date
of that agreement have been much higher than contemplated at the time of the
agreement.
X. Xxxxxx is willing to continue to provide services as an officer and as a
director of the Company and to represent the Company in seeking to complete an
acceptable acquisition transaction for the Company. However, the Board of
Directors has concluded that the Revised Funding Agreement should be modified.
H. The Company and Xxxxxx intend to revise and supplement the Company's
obligations under the Revised Funding Agreement as set forth herein.
NOW, THEREFORE, in consideration of the covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Xxxxxx and the Company agree as
follows:
1. The obligations of the Company and Xxxxxx as described in the Revised
Funding Agreement shall be modified as set forth herein.
2. Xxxxxx shall continue to serve as the President and as a director of the
Company until the first to occur of the following: (i) July 1, 2001, or (ii) the
date on which an acquisition transaction approved by the Board of Directors of
the Company is completed. In connection with providing such services, Xxxxxx
shall report his activities from time to time to the Board of Directors of the
Company and shall take such other action as may be necessary or appropriate or
as shall be assigned by the Board of Directors.
3. The Company shall use its cash, received from whatever source, to pay
the Company's obligations to third parties. To the extent that Xxxxxx has in the
past paid, or may hereafter advance, on behalf of the Company, payment of any of
the Company's obligations to third parties, the Company shall, at or before the
completion of an acquisition transaction, pay to, or reimburse, Xxxxxx for all
such payments made by him on behalf of the Company.
4. As of the date hereof, the Company shall issue to Xxxxxx 1,000,000
shares of the Company's no par value common stock (the "Shares") as contingent
compensation to him for the services he has provided to the Company as an
officer and director and for negotiating the acquisition transaction with
FastPoint, and attempting to complete the transaction for the benefit of the
Company. The Company shall have the right, however, at the Company's sole
election, to cancel the Shares being issued to Xxxxxx and return such Shares to
the status of unissued shares if the Company has taken, or caused to be taken,
all of the following actions:
o Completed an acquisition transaction with FastPoint
Communications, Inc. or some other entity acceptable to the Board
of Directors on or before October 31, 2000.
o Paid to Xxxxxx, an amount equal to $150,000, less the net amount
of advances made by the Company to Xxxxxx between July 31, 1999
and July 1, 2000, plus $20,000 for each month beginning July 1,
2000 until completion of an acquisition transaction.
o Received all amounts which FastPoint is or shall be obligated to
pay to the Company under the Merger Agreement, as it may be
amended prior to closing of a transaction.
The Company shall be authorized and entitled to exercise its right to cancel the
issuance of the shares to Xxxxxx if each of the conditions set forth above have
occurred, or are waived by Xxxxxx, by delivering written notice thereof to
Xxxxxx and surrendering the certificate evidencing the Shares to the stock
transfer agent for the Company with directions to cancel the issuance thereof.
5. The Company shall retain possession of the certificate(s) representing
the Shares until November 15, 2000 and shall thereafter deliver the
certificate(s) representing the Shares to Xxxxxx unless the Company has on or
before such date notified Xxxxxx in writing that: (i) the conditions described
above have been satisfied and (ii) that the Company is exercising its option to
cancel the issuance of the Shares.
6. The parties agree to take such further action and to consider such
additional developments as may be reasonably necessary in order to accomplish
the purposes set forth herein.
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7. This revised Agreement shall replace the Revised Funding Agreement
effective as of July 1, 2000 in order to accurately reflect the parties'
intentions as stated above.
Dated: effective September 25, 2000.
PROCARE INDUSTRIES, LTD.
By
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Xxxxx Bergenfield, Director
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Xxxxxx X. Xxxxxx
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