RESTATED CONSULTING AGREEMENT
THIS THIRD AMENDMENT made as of November 1, 1999, to the Agreement dated as
of October 1, 1997 (the "AGREEMENT") and previously amended as of December 30,
1998 and June 8, 1999 between Broadland Capital Partners ("BROADLAND") having an
office at 00000 Xxxxxxxx Xxxxxxx Xxxxxx, Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000 and
Xxxx Group, Inc. (the "COMPANY") having an office at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx Xxx, Xxxxxxxxxx 00000 as follows: The Agreement remains in full force and
effect, effective as of October 1, 1997, subject to the limited changes to the
preamble and Sections 1 through 3 as restated below:
WHEREAS, Broadland and the Company have agreed to amend the Agreement to
eliminate Broadland's monthly fee of $3,500 together with reimbursement of
out-of-pocket expenses.
WHEREAS, the Company has amended Broadland's Warrant to accelerate vesting
in the event of a Change in Control (as defined in the Warrant).
WHEREAS, in entering into this Agreement, the Company intends to enhance
its ability greatly to achieve three important corporate goals (hereinafter
referred to as the "GOAL") as follows:
(a) (this First Goal is deleted);
(b) (this Second Goal is deleted); and
(c) from September 1998 and until November 30, 2001, to use its shares as
consideration for the acquisition of entities having an aggregate
annual revenue of Fifteen Million Dollars ($15,000,000) (the "THIRD
GOAL").
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
- Assist the Chief Executive Officer with the completion of the
Company's five-year Strategic (Equity) Plan. (Taking the Business
Plan and
developing an appropriate Equity Plan to maximize the value of
the Company's Market Value.)
- Identify and assist the Chief Executive Officer in the selection
of appropriate investment banking firms.
- (This section is deleted.)
- 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 SERVICE:
(a) (This section is deleted.)
(b) WARRANTS
(i) The text of section 2(b)(i) is hereby deleted and replaced with
the following:
A warrant, in the form of Exhibit A attached hereto (the
"WARRANT") to purchase shares of the Company's common stock,
$.01 par value per share (the "COMMON STOCK"), at $3.50 per
share. Neither Broadland nor Xxxxxx Xxxxx shall have any
interest as a stockholder of the Company with respect to such
shares until the Warrant is exercised and such shares are
purchased thereunder.
(ii) NUMBER OF WARRANTS: The Warrant shall grant Broadland the right
to purchase up to 100,000 shares of the Company's Common Stock
at the Warrant Price.
(iii) THE WARRANT SHALL VEST AS FOLLOWS: The Warrant to purchase
100,000 shares of the Company's Common Stock shall be vested and
exercisable as follows:
Warrants Exercise Price Vesting
-------- -------------- -------
50,000 $3.50/Share At closing of major or strategic acquisition
25,000 $3.50/Share At closing of major or strategic acquisition
10,000 $3.50/Share At closing of minor acquisition
15,000 $3.50/Share Other acquisition projects as negotiated
2
(iv) The Warrant must be exercised with respect to shares within five
(5) years after the Warrant vests or, thereafter, the Warrant
shall expire and become null and void.
(v) At the time that a Change in Control (as defined in the Warrant)
of the Company occurs, the Warrant will vest immediately with
respect to any unvested portion at that time and will remain
exercisable with respect to such portion until five (5) years
after the effective date of any such Change in Control. In
addition, if a Change in Control of the Company occurs, the Board
of Directors, in its sole discretion and without the consent of
Broadland, may determine that Broadland will receive, with
respect to some or all of the unexercised Stock Units, as of the
effective date of any such Change in Control of the Company, cash
in an amount equal to the excess of the Fair Market Value of such
Stock Units immediately prior to the effective date of such
Change in Control of the Company over the exercise price per
share of the Warrant. Notwithstanding the foregoing, no such
vesting will occur in the event of a Change of Control if such
vesting would adversely impact the availability of "pooling of
interests" accounting treatment.
3. 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 November 30, 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. The
Warrant 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, the
Warrant remaining unvested shall expire and become null and void.
4. INDEPENDENT CONTRACTOR:
3
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 claims 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 California 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 Group, Inc. (successor to Xxxx
Systems, Inc.)
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Dirk
---------------------------- ------------------------------
Xxxxxx Xxxxx, President Xxxxxxx X. Dirk, Chairman and
Chief Executive Officer
/s/ Xxxxxx Xxxxx
---------------------------
Xxxxxx Xxxxx, Individually
4
