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EXHIBIT 10.1
CONSULTING AND ADVISORY 11/11/98
SERVICES COMPENSATION AGREEMENT
THIS CONSULTING AND ADVISORY SERVICES COMPENSATION AGREEMENT
("AGREEMENT") by and between S.I. Diamond Technology, Inc., a Texas corporation
("SID"), and C & A Services, L.L.C., a Texas limited liability company ("C &
A"), is executed this 11th day of November 1998.
W I T N E S S E T H
WHEREAS, SID is engaged in the business, directly, or through SID
subsidiaries and affiliates, of development, production, installation,
operation, ownership, sale and/or lease of electronic display devices for
display of advertising on such as electronic billboards, signs, marquees and
other devices for installation in, or on, the facilities of third-parties
("SYSTEMS");
WHEREAS, SID desires to develop the market for the Products in, or on, the
facilities of businesses ("CUSTOMERS");
WHEREAS, C & A has experience and relationships with Customers and has
assisted SID in beginning a program for, and an organized effort to develop, a
market for the Systems among Customers, and C & A has agreed to continue to
consult with and assist SID in regard to the Systems and Customers;
WHEREAS, at the request and direction of SID, C & A has been instrumental
in assisting Electronic Billboard Technology, Inc., a Delaware corporation
("EBT"), a wholly owned subsidiary of SID, in entering into that certain
Marketing Agent Agreement, dated November 11,
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1998, between EBT and Vision Mark, L.L.C., a Texas limited liability company
("VISION"), relating to the marketing of the Systems by Vision to certain
Customers ("EBT AGREEMENT");
WHEREAS, SID has requested that C & A continue to consult with, and
advise, SID with respect to Customers and marketing of the Systems and C & A has
agreed to continue to consult with and advise SID with respect to Customers and
marketing of the Systems (collectively "SERVICES");
WHEREAS, incident to the Services, SID has requested a Manager of C & A,
Billy Jeff Clement, a resident of Dallas, Dallas County, Texas ("CLEMENT"), to
serve on the Board of Directors of SID;
WHEREAS, SID now has 120,000,000 shares of authorized $.001 par value
voting common capital stock ("COMMON STOCK"), of which 44,000,000 shares of such
Common Stock are now authorized, issued and outstanding;
WHEREAS, SID has offered to compensate C & A for the Services with certain
shares of Common Stock currently, and warrants to acquire certain additional
shares of Common Stock in the future, and C & A has agreed to accept such
compensation (collectively "COMPENSATION SHARES"); and,
WHEREAS, SID and C & A have agreed to enter into this Agreement for the
purpose of setting forth the terms and conditions of their agreement with
respect to the Systems, Customers, Services and Compensation Shares.
NOW THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which SID and C & A do
hereby acknowledge and confess, SID and C & A do hereby covenant and agree as
follows:
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1.
Definitions
1.1 For purposes of this Agreement, the following terms shall have the
defined meanings given those terms in the EBT Agreement and such terms
definitions are, for simplicity and convenience, incorporated herein by
reference for all purposes:
(a) Advertising (d) Operating Systems
(b) Distribution Revenue (e) Protected Customers
(c) Distribution Schedule (f) Revenue
Defined terms in this Agreement, other than those defined in the EBT Agreement
listed above, shall have the meaning given such terms in this Agreement.
2.
Appointment of C & A
2.1 Subject to the terms and conditions of this Agreement, SID hereby
appoints C & A as non-exclusive consultant to SID for marketing and promotion of
the Systems to Customers and C & A hereby accepts such appointment.
2.2 For purposes of this Agreement, a Customer shall be deemed to include
all divisions, subsidiaries and controlled affiliates of a Customer. For
purposes of this Agreement, Customers shall be businesses selling at retail,
wholesale or discount, whether multi-location or single location, and facilities
which contain such businesses.
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3.
Services of C & A
3.1 C & A shall use C & A's best efforts to reasonably provide the
Services to SID from time to time at SID's request, subject to a reasonable
scheduling balance and coordination with SID.
3.2 C & A shall pay C & A's expenses in the performance of this Agreement.
4.
Compensation Shares
4.1 Subject to the limitation contained in Paragraph 4.2, the Compensation
Shares shall be acquired, and available for acquisition, by C & A as follows:
(a) Concurrently with, and at such time as, EBT shall first enter
into a letter of intent with any one or more Protected Customers for, in
the aggregate, installation of the first Operating System, SID shall
immediately issue to C & A 300,000 of the Compensation Shares, and SID
shall issue and deliver to C & A three (3) certificates for such
Compensation Shares, each registered in the name of C & A, and each for
100,000 of the Compensation Shares;
(b) In addition, concurrently with, and at such time as, EBT shall
have received Protected Customer Distribution Revenue equal, in the
aggregate, to Ten Million and No/100 Dollars ($10,000,000.00), and as each
successive and cumulative such increment of Protected Customer
Distribution Revenue shall be received by EBT, C & A shall have the right,
exercisable at will by C & A, to purchase from SID, successively, for each
such Ten Million and No/100 Dollars ($10,000,000.00) increment of
Protected customer
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Distribution Revenue, 250,000 additional Compensation Shares at a purchase
price per share equal to one-half (1/2) of the average closing public
market price of the publicly traded Common Stock on the five (5) business
days next preceding the first day each such Ten Million and No/100 Dollars
($10,000,000.00) in Protected Customer Distribution Revenue, in the
aggregate, is received by EBT and, concurrently with execution of this
Agreement, SID shall complete, execute, issue and deliver to C & A, in
evidence of such right, the warrant form attached hereto as Exhibit A
("WARRANT FORM"), for such additional Compensation Shares containing the
aforesaid conditions precedent to exercise by C & A;
(c) In addition, annually, and within sixty (60) days following each
annual anniversary of the EBT Agreement, C & A and SID shall jointly
determine the sources of the components of the aggregate revenue
(including, but not limited to, revenue from the sale of product,
services, licensing fees, royalties and similar items in the ordinary
course of business, but excluding all extraordinary non-reoccurring items
such as the sale of a division, subsidiary, financing or similar such
events) realized by SID for such annual period ("SID REVENUE"), and the
percentage of such aggregate SID Revenue that was Protected Customer
Distribution Revenue and if the Protected Customer Distribution Revenue
was at least equal to Ten Million and No/100 Dollars ($10,000,000.00) for
such annual period, C & A shall have the additional right thereafter,
exercisable at will by C & A, to purchase from SID up to 200,000
additional Compensation Shares with respect to each such annual
determination, and, concurrently with execution of this Agreement, SID
shall complete, execute, issue and deliver to C & A, in evidence of such
right, a
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Warrant Form for such additional Compensation Shares, containing the
following conditions precedent to exercise by C & A:
(i) If the EBT Protected Customer Distribution Revenue percentage
for such annual period was equal to, but not less than, twenty-five
percent (25%), of aggregate SID Revenue for such annual period, C &
A may, from time to time, and at anytime thereafter purchase all, or
any part of, 100,000 of such additional Compensation Shares at a
purchase price per share equal to seventy-five percent (75%) of the
average closing public market price of the publicly traded Common
Stock on the five (5) business days next preceding the last business
day of such annual period; and, in addition,
(ii) If the EBT Protected Customer Distribution Revenue percentage
for such annual period was equal to, but not less than, twenty-five
percent (25%), of aggregate SID Revenue for such annual period, for
each additional one percent (1%) above twenty-five percent (25%)
that the EBT Protected Customer Distribution Revenue contributed to
aggregate SID Revenue for such annual period, C & A may, from time
to time, or at anytime thereafter, purchase all, or any part of, up
to, but not in excess of, 100,000 of such additional Compensation
Shares in incremental amounts of 4,000 Compensation Shares each for
each such additional one percent (1%) of EBT Protected Customer
Distribution Revenue, at
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a purchase price per share equal to the average closing public
market price of the publicly traded Common Stock on the five (5)
business days next preceding the last business day of such annual
period, less a percentage thereof equal to the sum of twenty-five
percent (25%), plus an additional one percent (1%) for each
additional one percent (1%) above twenty-five percent (25%) (not to
exceed, in the aggregate, fifty percent [50%]) that the EBT
Protected Customer Distribution Revenue contributed to aggregate SID
Revenue for such annual period;
(d) In addition, C & A shall have the right, with the receipt by
EBT of the first One Hundred Million and No/100 Dollars ($100,000,000.00)
of Protected Customer Distribution Revenue and with the receipt by EBT of
the second One Hundred Million and No/100 Dollars ($100,000,000.00) of
Protected Customer Distribution Revenue, exercisable at will by C & A, to
purchase from SID, in each instance, an additional 2,300,000 Compensation
Shares, but not more than 4,600,000 Compensation Shares, in the aggregate,
at a purchase price per share equal to fifty percent (50%) of the average
closing public market price of the publicly traded Common Stock on the
five (5) business days next preceding the first day each such One Hundred
Million and No/100 Dollars ($100,000,000.00) of Protected Customer
Distribution Revenue is received by EBT and, concurrently with execution
of this Agreement, SID shall complete, execute, issue and deliver to C & A
in evidence of such right a Warrant Form, for such additional
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Compensation Shares, each of which shall contain the aforesaid conditions
precedent to exercise by C & A.
4.2 Notwithstanding anything contained in this Agreement to the contrary,
the Compensation Shares which C & A shall acquire, and have the right to
acquire, in the aggregate, pursuant to the provisions of Paragraph 4.1 of this
Agreement, shall be limited in number, in the aggregate, to 10,000,000
Compensation Shares, subject to adjustment, however, as provided in this
Agreement, and the Warrant Forms shall contain such aggregate Compensation Share
limitation.
5.
Term
5.1 The term of this Agreement ("TERM"), shall commence upon execution of
this Agreement by SID and C & A, and shall continue thereafter until the earlier
to occur of twenty (20) years thereafter or, after the initial two (2) years of
the Term, if no Operating System shall be operating on, or in, a Customer
facility.
5.2 In the event of the termination of the EBT Agreement, this Agreement,
and the rights and interests of C & A under the terms of this Agreement shall
also terminate, unless the termination of the EBT Agreement occurs under the
circumstances described in Section 6.3 of the EBT Agreement, in which event,
this Agreement and the rights and interests of C & A under the terms of this
Agreement shall survive and continue in full force and effect.
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6.
Status of Parties
6.1 The parties to this Agreement are, and shall remain, independent
contractors, and nothing herein shall be construed to create a partnership, or
joint venture, between the parties. Each of the parties shall be responsible for
the wages, hours, and conditions of employment of such party's personnel during
the Term of, and under, this Agreement.
6.2 Each of the parties shall perform and comply with all applicable laws,
regulations and agreements which govern, regulate or affect the ability of such
party to perform and comply with the terms and conditions of this Agreement.
6.3 For purposes of this Agreement, each of the parties shall be deemed to
mean and include the party and all of its, and their, divisions and
subsidiaries.
7.
Special Conditions
7.1 At the request of C & A, SID will cause Billy Jeff Clement
("CLEMENT"), to be elected by the current SID Board of Directors (the "BOARD")
to serve on the SID Board until the next annual meeting of the SID shareholders.
SID shall increase the size of the Board as necessary to accommodate the
addition of Clement. SID shall then cause Clement to be nominated for a full
term on the Board at the next annual meeting of SID shareholders. SID shall
continue to nominate Clement at the expiration of each term to which he is
elected provided this Agreement remains in effect. Furthermore, as the sole
shareholder of EBT, SID shall elect Clement to serve on the EBT Board of
Directors and shall continue to so elect Clement for as long as this Agreement
remains in effect.
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7.2 Notwithstanding execution of this Agreement by the parties, this
Agreement shall not become effective unless and until approved by the Board of
Directors of SID, and SID shall obtain such approval not less than fourteen (14)
business days execution by SID and EBT.
8.
Covenants, Representations and Warranties
8.1 Each party represents and warrants to the other party as follows:
(a) Such party has the requisite approvals, power and authority to enter
into, and perform and comply with, the terms and conditions of this
Agreement;
(b) Such party's performance and compliance with the terms and conditions
of this Agreement will not result in the violation or breach by such party
of any agreement to which such party is a party;
(c) Such party is validly organized and in good standing in such party's
state of incorporation or organization and duly qualified to transact
business in each jurisdiction in which the conduct of such party's
business requires such qualification; and,
(d) Subject to the provisions of Paragraph 7.2 of this Agreement, such
party has obtained all necessary consents, approvals and authority to
enter into, perform and comply with the terms and conditions of this
Agreement.
8.2 SID covenants and agrees that all Compensation Shares acquired by C &
A incident to this Agreement shall, upon issuance, be fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof; and, without limiting the generality of the foregoing, SID
covenants and agrees that SID will, from time to time, take all such action as
may be necessary to assure that the par value per share of the Common Stock is
at all times equal to,
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or less than, the then effective purchase price per share of the Compensation
Shares. SID further covenants and agrees that during the period within which the
Compensation Shares may be acquired by C & A, SID shall at all times have
authorized but unissued Common Stock in a sufficient number of shares to provide
the Compensation Shares to C & A.
9.
Miscellaneous
9.1 Notice. For purposes of all notices required or permitted by this
Agreement, such notices shall be given as follows:
(a) All notices, requests, consents and other communications hereunder to
a party shall be in writing and shall be personally delivered, or sent by
registered or certified mail, return receipt requested, postage prepaid, with a
copy by telefax, addressed to the person, or persons, to whom such notice is to
be given as follows
(i) if to SID, such notice shall be given at:
Suite 107
3006 Longhorn Boulevard
Austin, Texas 78758
Telephone: (512) 339-5020
Fax: (512) 339-5021
(ii) if to C & A, such notice shall be given at:
1904 South Akard
Dallas, Texas 75215
Telephone: (214) 428-0132
Fax: (214) 428-1851
(b) All notices, requests, consents and other communications hereunder
shall be deemed given upon the earlier to occur of (i) physical receipt by the
party to whom such notice is directed,
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or (ii) two (2) business days after deposit in the mail. Each party, by notice
duly given in accordance herewith, may specify a different address for the
giving of any notice hereunder.
9.2 Choice of Law. This Agreement shall be deemed to be made in the state
of Texas and, in all respects, shall be interpreted, construed, and governed by,
and in accordance with, the laws of the state of Texas. Venue for any action
arising hereunder shall be exclusively in a court of competent jurisdiction,
whether state or federal in Austin, Travis County, Texas.
9.3 Waiver of Rights. The waiver by any party of any term or provision of
this Agreement shall not be deemed to constitute a continuing waiver thereof nor
of any further or additional rights such party may hold under this Agreement.
9.4 No Assignment; Enforceability. This Agreement, with respect to the
Services, shall not be assignable by any party without the prior written consent
of the other party. Any attempt to assign, transfer, or subcontract any of the
rights, duties or obligations of a party under this Agreement with respect to
the Services without such consent shall be void. If any provision or provisions
of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
9.5 Complete Agreement. This Agreement, the Exhibits hereto and the
Warrant Forms set forth the entire agreement and understanding between the
parties as to the subject matter hereof and thereof, and merge all prior
discussions between them, and none of the parties shall be bound by any
conditions, definitions, warranties, understandings or representations with
respect to said subject matter other than as expressly provided herein, or in
any prior existing written agreement between the parties, or as duly set forth
on, or subsequent to, the effective date hereof in writing
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and signed by a proper and duly authorized representative of the party to be
bound thereby. No provision appearing on any form originated by a party shall be
applicable unless such provision is accepted in writing by the other party. This
Agreement may not be modified or altered except by a written instrument duly
executed by the parties hereto.
9.6 Binding Agreement. Subject to the transfer restrictions set forth
herein, this Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and assigns.
9.7 Headings. The clause headings appearing in this Agreement have been
inserted for the purpose of convenience and ready reference. They do not purport
to, and shall not be deemed to define, limit or extend the scope or intent of
the clauses to which they appertain.
9.8 Confidentiality. The terms and conditions of this Agreement are
confidential and not subject to third-party disclosure by SID or C & A, except
as required by law, or for regulatory compliance, of either SID or C & A.
9.9 Warrant Subscription Agreement. Concurrently with execution of this
Agreement, C & A shall execute and deliver to SID the form of Warrant
Subscription Agreement attached hereto as Exhibit B.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as set forth below.
C & A:
C & A SERVICES, L.L.C.
By: /s/ Gerry R. Hurst
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Name: Gerry R. Hurst
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Title: Manager
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Date: November 11, 1998
SID:
S.I. DIAMOND TECHNOLOGY, INC.
By: /s/ Marc W. Eller
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Name: Marc W. Eller
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Title: Chief Executive Officer
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Date: November 11, 1998
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