EXHIBIT 10.1
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MANAGEMENT CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of this 22nd day of
December, 2003 by and between STRATEGY PARTNERS, LLC, a limited liability
company organized under the laws of the State of California (hereinafter
"STRATEGY"), and ZENITH TECHNOLOGY, INC., a corporation organized under the laws
of the State of Nevada (hereinafter the "Company", and together with STRATEGY,
the "Parties").
The Parties agree as follows:
I. Retention
A. MANAGEMENT CONSULTANT. The Parties acknowledge that STRATEGY personnel
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are highly skilled in the field of rendering advice to business organizations
such as the Company, including but not limited to: (a) assistance in the
implementation of a strategic growth plan; (b) corporate strategy; (3) budgeting
of future corporate investments; (4) acquisition and divestiture decisions; (5)
federal and state securities law disclosure compliance; and (6) debt and equity
financings. Strategy shall render management consulting services from time to
time to it regarding the Company and its subsidiaries, if any, their financial
and business affairs and their relationships with their lenders and
stockholders, and the operation and expansion of their businesses. Subject to
the request of Company, Strategy's personnel shall attend meetings of the Board
of Directors of the Company and its subsidiaries and shall be available to the
Company's managers, auditors and other personnel for consultation and advice,
subject to Strategy's reasonable convenience and scheduling. Performance
objectives for the current undertaking include, but is not limited to, strategic
recapitalization of the Company; introduction of various private equity funds
and special situation investors; preparation and structuring of 2004 employee
stock incentive plan and 2004 management incentive program; corporate governance
consulting to align Company with NASDAQ Smallcap qualitative listing standards
and ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002; assistance in building IR and PR strategy
commensurate with the Company's growth and prospects.
B. CONSULTANT. In addition to the management consulting services set forth
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above, STRATEGY also shall from time to time during the term of this Agreement
provide, on a non-exclusive basis, financial consulting services to the Company,
and in its capacity as financial consultant to the Company, STRATEGY shall
maintain its familiarity with the Company's operations, prospects, assets,
capitalization and financial position, the trading markets for its securities if
relevant, and such other related factors as STRATEGY deems relevant. STRATEGY
will advise the Company as to opportunities in the financial markets for the
Company, assist the Company in all of its financing transactions and advise the
Company in any future recapitalization transactions, acquisitions or
dispositions of assets or a similar transaction.
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C. MERGERS AND ACQUISITIONS CONSULTING. The Company further retains
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STRATEGY on a non-exclusive basis, for purposes of introducing the Company to
strategically identified investment banks, financial groups and/or other
investors or to be introduced to an opportunity that may be an appropriate
acquisition or acquisitions for the Company (each, a "Target") so that the
Company can discuss with such Target, potential investment opportunities in the
Company which may be in the form of an equity investment, merger, takeover or
similar transaction. All entities introduced by STRATEGY to the Company
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constitute potential Targets hereunder. The Company shall identify and promptly
refer to STRATEGY (i) all persons or entities who have been in contact with the
Company prior to the date hereof regarding a possible Transaction (as defined
below) and (ii) all persons or entities who make inquiries to the Company during
the term of this Agreement regarding a possible Transaction, and such persons or
entities, as applicable, shall be added to Exhibit A hereto.
II. PERFORMANCE OF MANAGEMENT CONSULTING SERVICES
A. SERVICES. STRATEGY hereby agrees during the term of this engagement to
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consult with the Company Board, in such manner and on such business and
financial matters as may be reasonably requested from time to time by the
Company Board, including, but not limited to: (1) implementation of a Strategic
Growth Plan; (2) corporate strategy; (3) budgeting of future corporate
investments; (4) acquisition and divestiture decisions; (5) issues related to
federal, state and self regulatory organization disclosure compliance; and
(6) debt and equity financings.
B. APPOINTMENT AND REPLACEMENT OF STRATEGY PERSONNEL. STRATEGY shall
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provide and devote to the performance of services under this Agreement such
employees, agents and delegees of STRATEGY as STRATEGY shall deem appropriate
(collectively, "STRATEGY Personnel"). STRATEGY Personnel shall include (but may
not be limited to) those persons listed in Appendix A hereto, as the same may be
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amended from time to time. STRATEGY may replace its STRATEGY Personnel at any
time, for any reason and from time to time, with or without cause, in its sole
discretion, and shall provide written notice to the Company of the new persons
who will replace such STRATEGY Personnel, if any. The time dedicated by STRATEGY
Personnel in providing the services hereunder shall be determined in the sole
discretion of STRATEGY. The Company shall provide STRATEGY Personnel with
appropriate space, facilities access and office furniture and equipment at the
Company's principal headquarters in Lake Forest, California and any other
facility of the Company or its subsidiaries as such personnel shall reasonably
request, complete and unfettered access to Company books and records, personnel
and information (except as shall be limited or restricted by the provisions of a
non-disclosure agreement to be entered into with the Company and approved by
STRATEGY) as such personnel shall reasonably request, and the full and complete
cooperation of the Company, its subsidiaries, and their respective directors,
officers, employees agents and representatives in any other manner, to enable
such personnel to render services hereunder.
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III. FINANCIAL CONSULTING SERVICES.
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A. STRATEGY shall act as the financial consultant to the Company in
connection with the Company's efforts to raise capital and or find an
opportunity that may be an appropriate acquisition or acquisitions for the
Company through an initial transaction (the "Initial Transaction") and
subsequent transactions, which may include an offering of securities, or through
a sale, merger, business combination or similar transaction involving the
Company (each, a "Subsequent Transaction" and, together with the Initial
Transaction and every other prior, Subsequent Transaction, if any, a
"Transaction"). STRATEGY's activities will be coordinated with the Company's
management, controlling shareholders, other professional advisors and the
Company's board of directors (all of whom will cooperate with STRATEGY). In
each case STRATEGY shall use all reasonable efforts, as appropriate, to:
a. assist the Company to retain investment bankers and, if applicable,
provide legal counsel, in preparing appropriate term sheets,
subscription agreements and other documents required in connection
with the Transaction;
b. assist the Company in negotiations and due diligence of potential
acquisition targets;
c. evaluate financial assumptions and forecasts prepared by the Company;
d. advise on the Value of the Company, or seek outside financial
valuation services for the Company or a TARGET;
e. examine the capital structure of the Company;
f. review any offering documents, if any, prepared by the Company for use
in any Transaction;
g. assist with the identification of potential Financing Sources;
h. arrange meetings with Financing Sources;
i. perform disclosure compliance, including without limitation assistance
in the preparation of interim and periodic reports to be filed with
the Securities and Exchange Commission;
j. optimize compensation strategy for management and other key employees
of the Company; and
k. at the Company's sole discretion, become a member of the board of
directors of the Company, or accept appointment of a member of
STRATEGY PERSONNEL to the Board of the Company.
IV. COMPENSATION.
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STRATEGY shall be entitled to receive, and the Company agrees to pay STRATEGY,
the following compensation:
COMPENSATION FOR MANAGEMENT CONSULTING. Company agrees to provide and deliver to
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STRATEGY five million two hundred and seventeen thousand (5,217,000) shares of
the Company's Common Stock as initial payment due on signing of this Agreement,
which shares shall be construed as payment for services to be rendered by
STRATEGY on behalf of the Company for the next twelve months for its role as
Management Consultant, and for the substantial completion of the performance
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objectives outlined in Part I, Paragraph A above ("Initial Engagement"). Such
payment shall be received by STRATEGY no later than January 5, 2004. The shares
issued to STRATEGY hereunder shall be registered for public sale pursuant to a
registration statement or statements filed with the Securities and Exchange
Commission ("SEC") on Form S-8, to be filed not later than February 12, 2004.
Company agrees to further compensate STRATEGY, in connection with its management
consulting services in relation to corporate strategy consulting and the filing
of interim, quarterly and annual federal securities disclosure reports,
including preparation of appropriate forms and Edgarization of such forms for
filing with the U.S. Securities and Exchange Commission, STRATEGY will charge
its normal hourly rates for services rendered, as shown in Appendix A, and
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agrees to be compensated in the form of common stock of Company, and to receive
such stock in lieu of cash payment for services rendered, provided that such
shares shall be similarly registered with the SEC on Form S-8. Valuation of
said stock will be calculated based upon the 10-trading day average closing bid
value of the 'Company's Common Stock immediately preceding the date of the
applicable invoice issued by STRATEGY to the Company.
COMPENSATION FOR FINANCIALCONSULTING/M&A CONSULTING. Upon the success of any
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Transaction, the Company shall issue a Warrant to purchase 2,500,000 shares of
restricted Common Stock at an exercise price of $.25 cents per share. Such
warrants shall be entitled to anti-dilution, registration and other rights, as
set forth in the warrant. Upon the closing of any Transaction, including any and
all financings, sale of assets, merger, acquisition or combination of assets and
capital raises for the Company, or any other equivalent transaction, STRATEGY
will be paid at each such closing an amount equal to 5% of the gross value of or
proceeds received by the Company at closing (the "Gross Proceeds") up to
$1,000,000, plus 4% of any Gross Proceeds between $1,000,001 and $2,000,000,
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plus 3% of any Gross Proceeds between $2,000,001 and $3,000,000, plus 2% of any
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Gross Proceeds greater than $3,000,001. The Company agrees promptly to reimburse
STRATEGY, whether or not a Transaction shall be proposed or consummated, for all
reasonable out-of-pocket costs and expenses incurred by STRATEGY in connection
with the performance of its services hereunder, including, but not limited to,
reasonable telephone and telex expenses and lodging and travel costs, upon
submission of appropriate invoices to the Company. It is understood and agreed
that compensation, if any, due and payable by the Company to third parties such
as banks, advisors and finders in connection with any Transaction are separate
and independent of any compensation payable to STRATEGY in respect of such
Transaction.
It is expressly agreed between the parties that no compensation is being or will
be awarded to STRATEGY in the form of stock registered pursuant to Form S-8 for
any service that directly or indirectly promotes or maintains a market for the
Company's securities. If such services are to be provided, STRATEGY will notify
Company and the parties shall agree in advance that such fees will be paid in
cash, in restricted securities or in non-restricted securities which have been
registered or exempt from registration, or some combination thereof, prior to
commissioning, performing and/or issuing an invoice for said services.
At all times other than for the Initial Engagement, STRATEGY will provide
written cost estimates to the Company within two (2) business days prior to
undertaking any services not expressly commissioned within this Agreement or, if
commissioned, require additional clarification as to the nature and scope of
such services.
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The Company agrees to assist STRATEGY in its engagement by the Company
hereunder by:
making available to STRATEGY all information concerning the Company's
business, assets, operations and financial condition as may be reasonably
requested by STRATEGY and/or any potential Financing Source; and
making available to STRATEGY the Company's management, other personnel and
the appropriate representatives of its independent public accountants for
discussions and consultations at such times as STRATEGY may reasonably
request in furtherance of STRATEGY's obligations hereunder.
STRATEGY shall be entitled to rely upon all reports of the Company and all
information supplied to it by the Company or its authorized employees and
representatives. The Company represents and warrants that all such information
supplied to STRATEGY shall be true, correct and complete. STRATEGY shall not in
any respect be responsible for, or have any obligation to verify, the accuracy
or completeness of any such report or information and the Company shall
indemnify and hold harmless STRATEGY against any losses, claims, damages or
liabilities resulting from such inaccuracy or lack of completeness.
V. INDEMNIFICATION
The Company agrees to indemnify, defend and hold harmless STRATEGY, its
affiliates and representatives, and their respective shareholders, partners,
directors, officers and employees (collectively, the "STRATEGY Indemnified
Parties") against any claims, actions (wherever located), damages, losses,
liabilities or costs, including, without limitation, defense costs, court costs
and reasonable attorneys' fees and expenses incurred in investigation or defense
thereof (collectively, "Damages"), whether arising out of, based upon or related
to (i) acts or alleged acts taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, (ii) acts
or alleged acts taken or omitted to be taken by any STRATEGY Indemnified Party
with the Company's consent or in conformity with the Company's acts or omissions
or (iii) STRATEGY's engagement hereunder, any Transaction or the services
contemplated hereby. However, the Company shall not be liable for Damages
incurred by a STRATEGY Indemnified Party to the extent that a court having
competent jurisdiction shall have determined by final judgment that such Damages
resulted primarily and directly from the willful malfeasance or gross negligence
of such STRATEGY Indemnified Party.
The Company agrees that no STRATEGY Indemnified Party shall have any liability
(whether direct or indirect, in contract, tort or otherwise) for any Damages
sustained by the Company (or any person claiming through the Company) unless a
court having competent jurisdiction shall have determined by final judgment (not
subject to further appeal) that such Damages resulted primarily and directly
from the willful malfeasance or gross negligence of such STRATEGY Indemnified
Party under circumstances where STRATEGY's act or failure to act was not
specifically requested or consented to by the Company. Notwithstanding the
above, STRATEGY's liability hereunder shall not exceed the amount of fees
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actually received by STRATEGY hereunder (excluding any amounts received as
reimbursement of legal fees and expenses incurred by STRATEGY).
The provisions of this Article V shall apply to STRATEGY's engagement under this
Agreement, activities relating to such engagement occurring prior to the date
hereof, and any subsequent modification of or amendment to such engagement, and
shall remain in full force and effect following the completion or termination of
such engagement.
VI. CONFIDENTIALITY.
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By their execution hereof, each Party acknowledges to and agrees with the other
that in the exercise of the rights granted and duties delegated to such Party
pursuant to this Agreement, such Party may be or become familiar with or aware
of certain Confidential Information (as such term is hereinafter defined)
disclosed by the other, or one or more of its respective officers, directors,
employees, shareholders, partners, agents or representatives (each of such
relationships being defined herein as an "Affiliate"). Accordingly, each such
Party hereby agrees that any and all Confidential Information disclosed or
furnished to it, or to any of its Affiliates, by the other or any of its
Affiliates, is and shall remain proprietary to the disclosing Party. Neither
Party, nor any Affiliate thereof, shall have any rights to distribute or divulge
any of such Confidential Information to any third party without the prior,
written consent of the disclosing Party, nor use any of such Confidential
Information in any way detrimental to the disclosing Party or to any of its
Affiliates, or in any way which would otherwise destroy, injure or impair any of
its or its Affiliates' rights in or in respect of any such Confidential
Information including, without limitation, by using any of such Confidential
information to establish or assist any person or entity which is, or will be,
directly or indirectly in competition with the Company. For purposes of this
Agreement, the term "Confidential Information" shall mean any and all
proprietary information belonging to the Party disclosing such information
hereunder, whether tangible or intangible, written or oral, including, without
limitation, any intellectual property rights, books and records, computer
software and files, lists of (or proprietary information concerning) its
customers, suppliers, vendors and other business relationships, and any other
item which may properly be classified as a protected trade secret under the
California Trade Secrets Act, as amended. Each Party hereby expressly agrees
and understands that the agreements to abide by the provisions of this Section
VI constitute a material part of the consideration inducing each Party to make
available the Shares hereunder, and that any violation of such provisions could
create immediate and irreparable harm to the disclosing Party. In the event that
any receiving Party is requested in any proceeding to disclose any Confidential
Information, such Party shall give the Disclosing Party notice of such request
so that the Disclosing Party may seek an appropriate protective order. If, in
the absence of a protective order, a Receiving Party may nonetheless be
compelled to disclose Confidential Information, it may disclose such Information
without liability hereunder; provided, however, that we give you written notice
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of the Confidential Information to be so disclosed as far in advance as is
practicable. Each Party shall use its respective best efforts to obtain
assurance that confidential treatment will be accorded to such Confidential
Information.
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VII. REPRESENTATIONS AND WARRANTIES; ENFORCEMENT
Each of the officers, directors and affiliates of the Company and STRATEGY
hereby represents and warrants to the other that (i) such Party's representative
executing this Agreement has the authority to enter into and bind such Party to
the terms of this Agreement, (ii) this Agreement has been duly authorized,
executed and delivered by it and (iii) this Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms. Should either STRATEGY or the Company commence any action, suit or other
proceeding to enforce this Agreement or any provision hereof, the prevailing
Party in any such action, suit or other proceeding shall be entitled to recover
its reasonable attorney's fees and expenses incurred in connection therewith
from such other Party.
VIII. TERM.
The initial term of this Agreement shall be for a period of six (6) months,
commencing on the date first mentioned above, and shall automatically renew for
additional periods of six (6) months thereafter unless, at least sixty (60) days
prior to the date any such term is due to expire, either party shall provide the
other with a notice of non-renewal; provided, however, that STRATEGY shall be
entitled to receive the full fee set forth in Article IV hereof in the event
discussions are held with a Financing Source during the term of this Agreement
and a Transaction or other business arrangement is consummated with such
Financing Source within 12 months from the date this Agreement is terminated or
expires. This Agreement may be terminated by either party in the event the
other party shall have committed any material breach or violation of a material
representation, warranty, or agreement contained herein; provide that the
terminating party shall have delivered notice of such breach or violation to the
other party not less than thirty (30) days prior to the date of such termination
and, if such breach or violation is cured to the reasonable satisfaction of the
terminating party, or waived, within such thirty-day period then no termination
of this Agreement shall occur, or shall be deemed to have occurred.
IX. NOTICES
All notices, requests, demands, payments, consents and other communications
hereunder shall be transmitted in writing and delivery thereof shall be complete
when (a) delivered in person (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is sent
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service or by
registered or certified mail (receipt requested), postage and other charges
prepaid, in each case addressed as follows:
Company: Zenith Technology, Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Consultant: Strategy Partners, LLC
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Either of the Parties may change its address by giving notice of such change of
address to the other in accordance with the terms of this Article IX.
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X. NO PROJECTIONS OR REPRESENTATIONS
The Parties acknowledge and represent that no projections or representations
regarding the amount of income, sales, or profits they can expect to earn or
receive by virtue of this Agreement have been received by either Party. The
Parties acknowledge that no representations or warranties inconsistent with this
Agreement were made to induce either Party to execute this Agreement.
The Parties acknowledge that neither of the Parties nor any other person can
guarantee the successful arrangement or completion of all or any portion of a
Transaction. The undersigned, by signing this Agreement, acknowledge that they
have read same and that they have been requested to state in writing
hereafter and prior to execution hereof any terms, claims, covenants, promises,
or representations, including representations as to any income, sales, or profit
projections, that were made by either of the Parties or its representatives
contrary to the provisions of this Agreement, including the persons making same,
the location, and date thereof.
XI. ENTIRE AGREEMENT
The undersigned acknowledge that they, and each of them, have read this
Agreement in full, are cognizant of each and every one of the terms and
provisions hereof and are agreeable thereto, that no representations or
agreements, whether oral or written, except as hereinafter set forth, have been
made or relied upon and that any and all prior agreements or understandings
between the Parties, relating to the subject matter of this Agreement, whether
oral or written, are canceled by the execution of this Agreement. The
undersigned also acknowledge that the signatures affixed hereto were affixed as
the wholly voluntary act of the persons who signed this Agreement, and that the
terms and provisions of this Agreement cannot be changed or modified unless in
writing signed by the Company and STRATEGY acting through their respective
authorized representatives. No modification or amendment of any provision of
this Agreement shall be construed as a waiver, breach, amendment, modification
or cancellation of any other provision. As of the date hereof, this Agreement
constitutes the entire agreement and understanding between the Company and
STRATEGY.
XII. WAIVER OF RIGHTS
Any delay or failure by either of the Parties to enforce any rights or remedies
under this Agreement shall not be construed as a waiver of such rights or
remedies. Any waiver, including a waiver of default, in any one instance, shall
not constitute a continuing waiver or a waiver in any other instance. Any
acceptance of money or other performance by either of the Parties shall not
constitute a waiver of any default, except as to the payment or performance so
received.
XIII. VALIDITY OF PARTS; HEADINGS
Any invalidity of any portion of this Agreement shall not affect the validity of
the remaining portion, and unless substantial performance of this Agreement is
frustrated by any such invalidity, this Agreement shall continue in full force
and effect. The headings used herein are inserted for purposes of convenience
only and shall not be used in interpreting the provisions hereof.
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XIV. EXECUTION; COUNTERPARTS; FACSIMILE SIGNATURES.
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This Agreement shall not be binding on either of the Parties unless and until it
shall have been accepted and signed by authorized officers or directors of the
Company and STRATEGY. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimiles containing
original signatures shall be deemed for all purposes to be originally-signed
copies of the documents which are the subject of such facsimiles.
XV. ASSIGNMENT.
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This Agreement shall be binding upon and inure to the benefit of the Parties,
their heirs, successors, and assigns provided that no Party may assign this
Agreement without the prior written consent of the other Party.
XVI. GOVERNING LAW; JURISDICTION.
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This Agreement shall be governed by and construed in accordance with the laws of
the State of California without regard to any conflicts of laws principles of
any jurisdiction (including California). The Parties irrevocably submit to the
exclusive jurisdiction of the Federal and California State courts located in the
County of Orange for the purpose of any suit, action or other proceeding arising
out of this Agreement, or any of the agreements or Transactions contemplated
hereby, and (i) hereby irrevocably agree that all claims in respect of any such
suit, action or proceeding may be heard and determined in any such courts, (ii)
to the extent that any such Party has acquired, or hereafter may acquire, any
immunity from jurisdiction of any such court or from any legal process therein,
hereby waive, to the fullest extent permitted by law, such immunity and (iii)
agree not to commence any action, suit or proceeding relating to this Agreement
other than in such courts. Each of the Parties hereby waives, and agrees not to
assert in any such suit, action or proceeding, in each case, to the fullest
extent permitted by applicable law, any claim that (a) such Party is not
personally subject to the jurisdiction of any such courts, (b) such Party is
immune from any legal process (whether through service of notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to such Party or its property, (c) that venue in such county is in any
way improper, or (d) that any such suit, action or proceeding is brought in an
inconvenient forum. The Parties hereby waive any right to trial by jury in
connection with any dispute, action or proceeding relating to this Agreement, a
Transaction or any matter contemplated hereby. In the event either party shall
be forced to bring any legal action to protect or defend its rights hereunder,
then the prevailing party in such proceeding shall be entitled to reimbursement
from the non-prevailing party of all fees, costs and other expenses (including,
without limitation, the reasonable expenses of its attorneys) in bringing or
defending against such action.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
STRATEGY PARTNERS, LLC WITNESS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇
Its: Managing Member
Zenith Technology, Inc. ATTEST:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇ /s/
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By: ▇▇▇ ▇▇▇▇▇▇▇▇ . By:
Its: Chief Executive Officer Its: Secretary
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