CONSULTING AND COMPENSATION AGREEMENT
THIS AGREEMENT is made and entered into this 15th day of December, 1998,
by and between Xxxxxxx Xxxxxxx and Southeast Financial Consulting, Inc., on
one hand, (collectively "SFC") and Xxxxxxxx Coach, L.L.C. ("Xxxxxxxx"), DRK,
Inc., Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxx, on the other.
WHEREAS, Xxxxxxxx is a Louisiana limited liability company whose members
are DRK, Inc. (43.75% equity ownership), Xxxxx Xxxxxxxxx (43.75% equity
ownership), and Xxxxxxx Xxxxxx (12.5% equity ownership);
WHEREAS, Xxxxxxxx desires to effectuate a reverse merger with Micro
Hydro Power, Inc., a Delaware corporation ("MHP") which will subsequent to the
merger change its name to Xxxxxxxx Coach, Inc., or some close derivation
thereof;
WHEREAS, immediately subsequent to the merger there will be outstanding
10,100,010 shares of MHP stock, owned as follows: current shareholders of MHP
(600,010 shares or 6.0%); DRK, Inc. (3,062,500 shares or 30.63%); Xxxxx
Xxxxxxxxx (3,062,500 shares or 30,63%); Xxxxxxx Xxxxxx (875,000 shares or
8.75%); and SFC (2,400,000 shares or 24%);*
*SFC's shares will be held in escrow and released to SFC upon
performance as stated herein.
WHEREAS, Xxxxxxxx desires to use the consulting services and business
expertise of SFC, on a long term basis, to consummate the merger with MHP and
to assist Xxxxxxxx in the post-merger sale of restricted stock; and
WHEREAS, SFC is willing to provide such services in consideration for
the compensation stated herein;
NOW, THEREFORE, in consideration for the mutual promises contained
herein, SFC and Xxxxxxxx agree as follows:
1. Duties and Responsibilities of SFC
The primary responsibility of SFC will be to raise a minimum of two
million dollars ($2,000,000) in capital by assisting Xxxxxxxx in the post-
merger sale of restricted stock. In connection with such assistance, SFC
agrees that it will not disseminate any misleading information and will not in
any event disseminate any written information without the prior written
approval of Xxxxxxxx.
SFC will also provide general consulting services to Xxxxxxxx regarding
the contemplated merger with MHP. SFC will, both prior and subsequent to the
merger, provide marketing services to Xxxxxxxx. SFC will monitor market
developments pertinent to the post-merger sale of stock and will advise
Xxxxxxxx on the business significance thereof, in order to assist Xxxxxxxx in
strategic planning activities.
2. Compensation to SFC for services already rendered by SFC
a. For services already rendered by SFC, immediately after the merger
the escrow agent will release to SFC 147,000 shares of post-merger stock, from
which stock SFC will transfer to Xxxx Xxxxxxx 97,000 shares in satisfaction of
an agreement dated November 1998, and transfer to Xxxxxx Xxxxx 50,000 shares.
b. For services already rendered by SFC, including the transaction
pursuant to which Xxxxxxxx will transfer to Xxxxx Xxxxxxxxx 163,000 shares of
post-merger restricted stock, the escrow agent will immediately after the
merger release to SFC 83,000 shares of post-merger stock.
3. Compensation for Future Capital Raising Services of SFC
a. SFC agrees to assist Xxxxxxxx in the sale of Two Million
(2,000,000) shares of post-merger restricted stock at a price of One Dollar
($1.00) per share. MHP will issue an additional Two Million (2,000,000)
shares of post-merger stock for this purpose, thus resulting in 12,000,010
total shares outstanding.
b. In the event that within 15 days of the date the post-merger stock
begins trading, SFC has secured the sale of five hundred thousand (500,000)
shares of post-merger stock at a price of One Dollar ($1.00) per share and
Xxxxxxxx has received compensation therefor, the escrow agent will release to
SFC an additional Five Hundred Forty Thousand Five Hundred (542,500) shares of
post-merger stock held in escrow.
c. In the event that within 45 days of the date the post-merger stock
begins trading, SFC has secured the sale of the remainder of the 2,000,000
shares (i.e., and additional 1,500,000 shares of post-merger stock at a price
of One Dollar ($1.00) per share and Xxxxxxxx has received compensation
therefor, the escrow agent will release to SFC One Million Six Hundred Twenty
Seven Thousand five Hundred shares of post-merger stock held in escrow.
d. In the event SFC fails to meet the deadlines in b, and c, the
escrow agent shall transfer the shares held in escrow back to the corporation
which will recertificate same and hold same as treasury shares. Xxxxxxxx may
extend the time periods in b. and c. as Xxxxxxxx xxxxx prudent. In the event
the merger is not consummated, or the post-merger stock is not trading, within
thirty (30) days of the date of this agreement, all obligations under this
agreement are void. Xxxxxxxx may extend this time period as Xxxxxxxx xxxxx
prudent.
e. The escrow agent will release to SFC the shares held in escrow pro
rata to the stock shares purchased by SFC sources, to wit: When 10% of the
2,000,000 shares are sold to SFC sources, SFC will receive 10% of the
2,170,000 shares held in escrow, and so on until the two million shares sold
to SFC sources are purchased and all the 2,170,000 shares held in escrow are
released.
f. The escrow agent shall release the shares held in escrow upon
receipt of written instructions from Xxxxxxxx. All parties to this agreement
further agree that in any legal action against the escrow agent, the escrow
agent shall receive from any party the attorney fees the escrow agent incurs
in sail legal action. Each party shall be responsible for said attorney fees
jointly and severally.
g. SFC shall, out of the 2,170,000 shares held in escrow, satisfy all
Xxxxxxxx and/or SFC obligations to Xxxx Acunta and Xxxxxxx Xxxxxxxxxx.
h. The Xxxxxxxx members shall retain the voting rights to the
2,170,000 shares issued to SFC. Furthermore, SFC will notify Xxxxxxxx of
SFC's intent to subsequently transfer to any third party any of the 2,170,000
shares and Xxxxxxxx shall have the right to repurchase said stock from SFC for
fifteen (15) days after such notice and for the consideration contemplated by
SFC and such third party.
4. Sole Agreement
This agreement supersedes all previous agreements between Xxxxxxxx and
SFC/Xxxxxxx and represents the full and final agreement between Xxxxxxxx and
SFC/Xxxxxxx and may not be changed orally but only in a writing signed by each
party hereto.
5. Law Governing
This agreement will be governed by the laws of the State of Louisiana,
with venue in East Baton Rouge Parish, Louisiana.
6. Post Transaction Ownership
For informational purposes, it is noted that after the consummation of
all transactions reflected herein, the ownership percentage of all
shareholders will be as follows:
DRK: 25.52%
Lancaster: 25.52%
Xxxxxx: 7.29%
SFC: 20%
Xxxxxx and current MPH existing shareholders: 5%
SFC Sources who purchase of stock 16.6%
IN WITNESS WHEREOF, the parties hereto now sign this Agreement on the
date first above written, attesting by signature that the respective party has
read the foregoing document, understands its terms, conditions, and intentions
and fully assents thereto.
/s/Xxxxx Xxxxxxxxx
Xxxxxxxx Coach, L.L.C. DRK, Inc.
/s/Xxxxxxx X. Xxxxxxx /s/Xxxxx Xxxxxxxxx
Southeast Financial Consulting, Inc. Xxxxx Xxxxxxxxx
/s/Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxx
