CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") made effective August 31st,
1998, is between Baywood International, Inc., a Nevada corporation (the
"Company"), and Abacus Capital, L.L.C., a Washington limited liability company
("Consultant").
WHEREAS, the Company desires to retain Consultant and Consultant has
consented to provide consulting services for the Company;
NOW, THEREFORE, the Company and Consultant agree to the following terms and
conditions of Agreement.
AGREEMENT
1. RETENTION. Beginning on the Effective Date, which is the date hereof,
the Company will retain Consultant, and Consultant will accept retention by the
Company, as a consultant reporting to the Company's President in accordance with
the terms of this Agreement.
2. DUTIES. Consultant's primary duties during the term of this Agreement
will be to assist the Company in identifying acquisition prospects, negotiating
for the purchase of such prospects, completing due diligence and other
conditions to a closing of such transactions, and arranging financing of such
transactions, as contemplated by that certain Memorandum of Agreement between
the Company and Consultant, of even date herewith (the "Memorandum"), and such
reasonable other duties as the Board of Directors of the Company may reasonably
require.
3. TIME OBLIGATIONS. Consultant will devote a reasonable amount of time and
its best efforts to its duties during the term of this Agreement.
4. COMPENSATION.
4.1 For all services rendered by Consultant under this Agreement, the
Company will pay Consultant total consideration of Seventy Five Thousand Dollars
($75,000.00) (the "Fee") plus the Options (as hereinafter defined). The Fee
shall be payable within sixty (60) days of the date hereof in either (a) cash,
or (b) free trading common shares of the Company (the "Consideration Shares").
The number of Consideration Shares shall be determined as follows:
(a) if the common stock of the Company is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.,
Automated Quotation System ("NASDAQ"), the average closing sales price for such
stock totaling $75,000.00 in consideration (or the closing bid, if no sales were
reported, then as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the immediately prior 20
consecutive trading days before the date hereof) as reported in the Wall Street
Journal or such other source the parties deem reliable totaling $75,000.00 in
consideration; or
(b) if the common stock of the Company is quoted on NASDAQ (but not on
the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, then the average of the
means between the high and low asked prices for the common stock of the Company
on the immediately prior 20 consecutive trading days before the date hereof, as
reported in the Wall Street Journal or such other source as the parties deem
reliable.
4.2 If a Target (as defined in the Memorandum) is acquired as
contemplated therein, and the acquisition price of the Target exceeds
$15,000,000, Company shall issue to Consultant registered options (the
"Options") to acquire common stock of the Company at an
exercise price (the "Exercise Price") equal to the greater of (a) 10% of the
then-current share price, or (b) the price per share of the Consideration
Shares. The number of Options shall be determined by dividing 50,000 by the
Exercise Price and multiplying the quotient by each $5,000,000 increment, or
part thereof, where each $5,000,000 (or part thereof) represents one increment,
by which the acquisition price of the Target exceeds $15,000,000. The Options
shall vest immediately upon grant and shall have a term of five (5) years.
5. TERM AND TERMINATION.
5.1 Unless otherwise terminated as provided in Section 5, this
Agreement shall expire on the first anniversary of the Effective Date.
5.2 This Agreement shall also be terminated upon the following:
(a) Death of Consultant's principals; or
(b) For cause as provided in Sections 6.1, 6.2 and 6.3; or
(c) Failure of the Company to deliver the Fee to Consultant
within sixty (60) days of the date hereof.
5.3 Consultant shall be entitled to compensation received through the
date of termination if termination is with cause by the Company. If Consultant
is terminated by Company without cause, Consultant shall be entitled to its full
compensation hereunder. Consultant and Company shall each use reasonable efforts
to mitigate any monetary damages suffered by each as a result of the termination
of Consultant's employment. If this Agreement is terminated by Company upon the
death of Consultant's principals, and the acquisition contemplated by the
Memorandum has not been consummated, Consultant shall be entitled to retain so
much of the compensation received through the date of termination to cover all
costs and expenses incurred by Consultant in performance of its duties
hereunder, and shall refund the remaining amount of such compensation, if any;
provided, however, that Company shall not be entitled to terminate this
Agreement without terminating any pending acquisition transaction and paying for
all costs and expenses associated with or arising out of such termination,
including costs of counsel for Newco (as defined in the Memorandum).
6. CAUSE AND BREACH.
6.1 Where reference is made in this Agreement to termination being by
the Company with or without cause, "cause" shall mean cause given by Consultant
to the Company and is limited to the following:
(a) Repeated failure to carry out the reasonable directions of
the Company, provided such directions are consistent with the duties
and obligations herein set forth to be performed by Consultant; or
(b) Violation of a state or federal law involving the commission
of a crime against the Company or a felony materially adversely
affecting the Company; or
(c) Any material breach of this Agreement or the Memorandum or of
any covenant herein or the material falsity of any material
representation or warranty not corrected as provided in Section 6.3
hereof; or
(d) The bankruptcy or insolvency of Consultant.
6.2 Where reference is made in this Agreement to termination being by
Consultant with or without cause, "cause" shall mean any breach of this
Agreement by the Company not corrected as provided in Section 6.3 hereof
6.3 Whenever a breach of this Agreement by either party is relied upon
as a justification for any action taken by a party pursuant to any provision of
this Agreement, before such action is taken, the party asserting the breach
shall give the other party written notice of the existence and nature of the
breach and the opportunity to correct such breach during the period of twenty
(20) business days following such notice.
7. NOTICE. All notices and requests in connection with this Agreement shall
be in writing and may be given by personal delivery, registered or certified
mail, return receipt requested, telegram, telecopy or any other customary means
of communications addressed as follows:
Consultant: Abacus Capital, L.L.C.
Attn: Xxxxx X. Xxxxx, Manager
00000 X.X. 0xx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
With a copy to: Xxxxxxx & Biagi, P.L.C.C.
c/o Xxxxx Xxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Company: Baywood International, Inc.
Attn: Xxxx Xxxxxxxxxx, President
00000 Xxxxx 00xx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
With a copy to: Xxxxx, Xxxxxxxxx & Xxxxx
Attn: Xxx Xxxxx
Scottsdale Center
0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
or to such other address as the party to receive the notice or request shall
designate by notice to the other. The effective date of any notice or request
shall be five days from the date which it is sent by the addresor by registered
or certified mail, or when delivered to a telegraph company, properly addressed
as above with charges prepaid, or when personally delivered.
8. ASSIGNMENT. The rights of either party shall not be assigned or
transferred either voluntarily or by operation of law without the other party's
written consent, nor shall the duties of either party be delegated in whole or
in part either voluntarily or by operation of law without the other party's
written consent. Any unauthorized assignment, transfer or delegation shall be of
no force or effect.
9. COMPANY'S COUNSEL. The Company has retained independent legal counsel to
advise it with respect to this Agreement and is not relying on the Consultant or
its counsel for legal or tax advice.
10. MISCELLANEOUS.
10.1 WAIVER. No waiver of any of the provisions of this Agreement
shall be valid unless in writing, signed by the party against whom such waiver
is sought to be enforced, nor shall failure to enforce any right hereunder
constitute a continuing waiver of these same or a waiver of any other right
hereunder.
10.2 AMENDMENTS. All amendments of this Agreement shall be made in
writing, signed by the parties, and no oral amendment shall be binding on the
parties.
10.3 RELATIONSHIP OF PARTIES. Consultant is an independent contractor
and not an employee of the Company and agrees to comply with federal and state
tax and social security legislation as applicable to such independent
contractors. Consultant has no authority to bind the Company or incur any
obligation on behalf of the Company.
10.4 INTEGRATION. This Agreement, the Memorandum and the agreements
referenced therein, constitute the entire agreement between the parties relating
to the subject matter hereto and supersede and cancel any other prior agreements
and understandings of the parties in connection with such subject matter.
10.5 SEVERABILITY. The unenforceability or invalidity of any provision
or provisions of this Agreement shall not render any other provision or
provisions hereof unenforceable or invalid; if any one or more of the provisions
of this Agreement shall for any reason be excessively broad as to duration,
scope, activity or subject, it shall be construed by reducing such provisions,
so as to be enforceable to the extent compatible with applicable law.
10.6 HEADINGS. The headings or titles in this Agreement are for the
purpose of reference only and shall not in any way affect the interpretation or
construction of this Agreement.
10.7 GOVERNING LAW. This Agreement will be governed by the law of the
State of Washington, applicable to agreements between Washington residents to be
performed within the State of Washington.
10.8 ATTORNEYS' FEES. In the event of litigation to enforce this
Agreement, the prevailing party will be entitled to recover its reasonable
attorneys' fees as determined by the court.
10.9 COUNTERPARTS. This Agreement may be signed in one or more
counterparts, and by facsimile, and each such counterpart shall constitute an
original, and all taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
COMPANY: CONSULTANT:
Baywood International, Inc. Abacus Capital, L.L.C.
/s/ Xxxx Xxxxxxxxxx /s/ Xxxxx X. Xxxxx
-------------------------- ----------------------------
By: Xxxx Xxxxxxxxxx By: Xxxxx X. Xxxxx
Its: President Its: Manager
