BUSINESS CONSULTING AGREEMENT
AGREEMENT made and entered into as of this 24th day of December 2002,
(the "Agreement") by and between American Sports Development Group, Inc, a
Delaware corporation (the "Company") with principle offices at 000 Xxxxxx Xx.,
Xxxxxxxxxx, XX 00000, and Basic Investors Inc. with its principle office at 000
Xxxxxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx, Xxx Xxxx 00000 (Consultant).
American Sports Development Group, Inc. (ASDG) currently owns and
operates four operating subsidiaries - Paintball, Inc. (Paintball), American
Inflatables, Inc. (Inflatables), ILM< Inc. and Warrior Sports Gear. In May 2002,
ASDG completed a reverse acquisition with American Inflatables a publicly traded
(OTC) Company. ASDG was restructured as a holding company for these operating
entities and for other acquisitions as may occur in the future.
Paintball is a leading distributor and retailer of paintball gaming supplies,
offering a full range of products for participants in the fast growing sport of
paintball. Inflatables is a manufacturer and marketer of inflatables blimps and
other customer inflated products used for promotional and advertising purposes.
Warrior Sports Gear makes paintball apparel and soft goods such as packs,
t-shirts and safety equipment. ILM, Inc. is a provider of insurance for
participants in sporting related activities.
Whereas, the consultant is in the business of providing management and
financial consulting services to public companies and the Company believes such
experience is in its best interest to utilize.
Now, Therefore, the Company and Consultant hereby agree as follows:
1. ENGAGEMENT. The Company agrees to engage Consultant and Consultant
agrees to provide management and financial consulting service to the Company in
accordance with the provisions of this agreement.
2. TERM. The term of this Agreement shall commence on December 24, 2002
and shall continue until December 24, 2003 unless terminated by mutual consent
of both parties. Either party hereto may terminate this agreement without cause
on any of March 24, 2003, June 24, 2003 or September 24, 2003 by delivering to
the other party of written notice of at least 30 days prior to the desired
terminate date.
3. SERVICE. Consultant shall render advice and assistance to the
Company on business related matters and in connection therewith shall:
(a) Attend meetings of the Company's Board of Directors or
Executive Committee(s) when so requested by the Company;
(b) Attend meetings and at the request of the Company review,
analyze and report on proposed business opportunities;
(c) Assist Company with presentations at investment
conferences;
(d) Assist the company with due diligence and introduce
Company to new brokers, brokerage houses and retail investors.
(e) Assist Company in identifying and evaluating prospective
investors and condidates.
Anything to the contrary herein notwithstanding, it is agreed that the
Consultant's services will not include any services that constitute the
rendering of legal opinions or performance of work that is in the ordinary
purview of a certified public accountant.
4. COMPENSATION. In exchange for Consultant's services hereunder, the
Company hereby agrees to pay to Consultant the following:
(a) In consideration of such financial advisory services, the Company
agrees to (I) issue to Consultant, or its designee(s), a total of 1,000,000
newly issued u/c rule 144 restricted shares (the "shares"); 250,000 shares will
vest immediately and additionally 250,000 shares will vest every three months
until all shares are vested or this agreement is terminated to be held by
Consultant or its designee(s) as a long-term investment. If this agreement is
terminated for any reason prior to the date on which all such shares are vested,
Consultant shall be entitled to retain all shares that would have vested by the
end of the agreement quarter during which the termination date occurred, which
shares shall be fully vested and shall promptly return to the Company all
unvested shares. Company shall be responsible for providing legal opinion letter
for any and all of consultants vested shares on or before December 24, 2003.
The payments referenced in this paragraph shall be in addition to any
other compensation and reimbursement of expenses described herein.
Said shares shall bear the following legend:
"THE SHARES RPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("THE ACT") AND ARE "RESTRICTED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO TAN EFFECTIVE
REGISTRATION STATMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY.
(B) Financing Transaction
Additionally, if Consultant introduces the Company to another party or
entity during the term of the Agreement and, as a result of such introduction, a
financing transaction is consummated during the term or within the 12 month
period following the term of the Agreement the Company shall pay Consultant upon
the consummation of such financing transaction a fee equal to five percent (5%)
of the gross proceeds raised in such transaction.
(i) for purposes of this Agreement the term "financing transaction"
means any transaction which results in the Company receiving financing, weather
it be in the form of bridge financing, private placement financing, media
financing, stock option financing, secondary stock sales, debt sales or any
other type of financing.
(c) Acquisition Transaction
(I) For purposes of this Agreement, the term "acquisition
Transaction" means any merger, consolidation, reorganization or other business
combination pursuant to which the businesses of a third party are combined with
that of the Company, (ii) the acquisition, directly or indirectly, by the
Company of all or a substantial portion of the assets or common equity of a
third party by way of negotiated purchase or otherwise or (iii) the acquisition,
directly or indirectly, by a third party of all or a substantial portion of
assets or common equity of the Company by way of negotiated purchase or
otherwise.
(ii) In connection with a proposed Acquisition Transaction,
Consultant's services may include the following: (i) assistance in the
evaluation of a third party from a financial point of view, (ii) assistance and
advice with respect to the form and structure of the acquisition and the
financing thereof, (iii) conducting discussions and negotiations regarding an
acquisition transaction and (iv) providing other related advice and assistance
as the Company may reasonably request in connection with an acquisition
transaction.
(iii) For purpose of the Agreement, "Consideration" means the
aggregate value, whether in cash, securities, assumption of (or purchase subject
to) debt or liabilities (including, without limitation, indebtedness for
borrowed money, pension liabilities and guarantees) or other property,
obligations or services, paid or payable directly or indirectly (in escrow or
otherwise) or otherwise assumed by the acquirer in connection with an
Acquisition Transaction. The value of such Consideration shall be determined as
follows:
a. The value of securities, property and services shall be the
fair market value as we shall mutually agree upon at the date of the closing of
the Acquisition Transaction; and
b. The value of indebtedness, including indebtedness assumed,
shall be the face amount.
(iv) If the Consideration payable in an Acquisition Transaction
includes contingent payments to be calculated by reference to uncertain future
occurrences, such as future financial or business performance or as part of an
escrow, then any fees of Consultant relating to such Consideration shall b
payable at the time of the receipt of such Consideration.
(v) In connection with our services, you agree that is, during the term
of this Agreement or within one year thereafter, an Acquisition
Transaction is consummated with a third party introduced by Consultant,
or the Company enters into a definitive agreement with a third party
introduced by consultant, which at any time thereafter results in an
Acquisition Transaction, you will pay consultant a transaction fee
equal to five percent (5%) of the Consideration paid by the acquirer in
cash except to the extent a portion of the consideration paid by the
acquirer includes equity securities, the company may elect to pay a
pro-rata portion of the fee provided for in this paragraph in such
equity securities, provided, however, if the Company (directly or
through a third party) procures the other party to an Acquisition
Transaction without a direct or indirect introduction by Consultant,
the Company shall pay Consultant a fee equal to one percent (1%) of the
Consideration paid by the acquirer, but only in the event that
Consultant provides advisory services to the Company upon Company's
written request, in connection with the Acquisition Transaction.
5. REPRESENATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to Consultant, each such representation and warranty being
deemed to be material, that:
(a) The Company will cooperate fully and timely with Consultant to
enable Consultant to perform its obligations under the Agreement;
(b) The execution and performance of this Agreement by the Company has
been duly authorized by the Board of Directors of the Company in
accordance with applicable law.
(c) The performance by the Company of this Agreement will not violate
any applicable court decree, law or regulation nor will it violate any
provision of the organizational documents of the company or any
material contractual obligation by which the Company is bound.
(d) The shares, when issued, will be duly and validly issued, fully
paid and non-assessable with no personal liability, when fully vested,
to the ownership thereof; and
(e) The Company will act diligently and promptly in reviewing materials
submitted to it by Consultant to enhance timely distribution of such
materials and will inform Consultant of any inaccuracies contained
therein prior to dissemination.
(f) The Company is current in its reporting requirements pursuant to
the Securities and Exchange Act of 1934, as amended.
6. REPRESENTATIONS AND WARRANTIES OF CONSULTANT. By virtue of the
execution hereof: and in order to induce the Company to enter into this
Agreement. Consultant hereby represents and warrants to the Company as
follows:
(a) It has full power and authority to enter into this Agreement, to
enter into a consulting relationship with the Company and to otherwise
perform this Agreement in tbe time and manner contemplated;
(b) It, through its officers, directors and employees has the requisite
skill and experience to perform the services and to carry out and
fulfill its duties and obligations hereunder;
(c) Consultant is acquiring the shares pursuant to this Agreement for
its own account for investment purposes and not with a view to or
intention of distribution or resale, and consultant will not dispose of
any of the shares in contravention of the Securities Act of 1933, as
amended (the "Securities Act"), or any applicable state securities
laws.
(d) Consultant is aware that it is acquiring the Shares from the
Company in a transaction that has not been registered under the
Securities Act or pursuant to the securities laws and regulations of
any State, and that as a consequence, the Shares are "restricted
securities" as defined in Rule 144 promulgated under the Securities Act
("Rule 144") and may be resold only to the to the extent permitted by
Rule 144, or pursuant to a transaction that is registered under the
Securities Act and applicable state securities laws and regulations, or
pursuant to a transaction that is exempt from such registration.
(e) Consultant is an accreted investor as that term is defined under
Rule 144. Consultant is familiar with the provisions of Rule 144 and
understands the definition of "accredited investor."
(f) Consultant has had an opportunity to ask and receive answers
concerning the Shares and the business and financial condition of the
Company and has had full access to (A) such information concerning the
Company as Consultant has requested and (B) such other Information that
Consultant deems necessary or desirable to make an informed investment
decisions regarding the purchase of the Shares.
7. COMPANY'S RIGHTS TO APPROVE TRANSACTION. The Company expressly
retains the right to approve, in its sole discretion, each and every
transaction introduced by Consultant that involves the Company as a
party to any agreement. This agreement imposes no obligation on the
company to enter into any transaction at all with any third party.
Consultant and the Company mutually agree that Consultant is not
authorized to enter into any agreements on behalf of the Company.
8. COSTS AND EXPENSES FOR SPECIAL SERVICES. All third party and
out-of-pocket expenses that Consultant shall incur on behalf of the
Company in performing services under this Agreement shall be reimbursed
by the Company. Consultant agrees that it must obtain the Company's
permission prior to incurring any expenses. All expenses must comply
with the policies of the Company.
9. NON-EXCLUSIVE SERVICES. The Company understands that Consultant and
its agents are currently providing certain advisory and financial
consulting services to other individuals and entities. Company agrees
that Consultant and its agents are not prevented or barred from
rendering services of the same nature or of a similar nature to any
other individual or entity. Furthermore, Consultant understands and
agrees that the Company shall not be prevented or barred from retaining
other persons or entities to provide services of the same or similar
nature as those provided by Consultants.
10. LIABILITY OF CONSULTANT. In furnishing the Company with Financial
advice and other services as herein provided, neither Consultant nor
any employee or agent thereof shall be liable to the Company or its
creditors for errors of judgment or for anything except breech of any
Consultants representations warranties or covenants under this
agreement malfeasance or negligence in the performance of their duties
or reckless disregard of their obliga6ons and duties under the terms of
this Agreement.
It is further understood and agreed that the Consultant may rely upon
information furnished to it reasonably believed to be accurate and reliable and
that, except as herein provided, Consultant shall not be accountable for any
loss suffered by the Company by reason of the Company's action or non-action on
the basis of any advice, recommendation or approva1 of Consultant, its employees
or agents.
The parties further acknowledge that Consultant undertakes no
responsibility for the accuracy of any statements to be made by the Company's
management contained in press releases or other communications, including, but
not limited to, filings with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
11. CONFIDENTIALITY. Until such time as the same may become publicly
known, Consultant agrees that any information provided it by the Company of a
confidential nature will not be revealed or disclosed to any person or entities,
except in their performance of this Agreement, and upon completion of the term
of this Agreement and upon the written request of the Company, any original
documentation provided by the Company will be returned to it. Consultant will,
where it deems necessary, require confidentiality agreements from its employees
and/or agents where it reasonably believes they will come in contact with
confidential material.
12. NOTICES. All notices, requests, demands and other communication
provided for by this Agreement shall, where practical, be in writing and shall
be deemed to have been given when mailed at any general or branch United States
Post Office enclosed in a certified post-paid envelope and addressed to the
address of the respective party first above stated. Any notice of change of
address shall only be effective however, when received.
13. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the Company, its successors, and assigns, including,
without limitation, any corporation which may acquire all or substantially all
of the Company's assets and business or into which the Company may be
consolidated or merged. This agreement shall be binding on Consultant, its
successors and assigns and inure to the benefit of Consultant and its admitted
successors and assigns.
Consultant agrees that it will not sel1, assign, transfer, convey, pledge or
encumber this Agreement or its right, title or interest herein, or any
compensation due hereunder without the prior written consent of the Company,
this Agreement being intended to secure the personal services of the Consultant.
14. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of New York without giving effect to the principals of conflicts of law.
15. OTHER AGREEMENTS. This Agreement supersedes all prior
understandings and Agreements between the parties. It may not be amended orally,
but only by a writing signed by the parties
16. NON-WAIVER. No delay or failure by either party in exercising any
right under this Agreement, and no partial or single exercise of that right
shall constitute a waiver of that or any other right.
17. HEADING. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
AMERICAN SPORTS DEVELOPMENT GROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx, President
BASIC INVESTORS INC.
By: /s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx, President
BASIC INVESTORS, INC.
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Phone (000) 000-0000
Fax (000) 000-0000
Toll Free (000) 000-0000
December 19, 2002
Xx. Xxxxxxx X. Xxxxxxxxx
President
American Sports Development Group, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx. XX 00000
Dear Xx. Xxxxxxxxx:
Please distribute the restricted shares as follows as per the Business Contract
on a quarterly basis:
------------ ----------------------- ------------- ------------ ---------- ---------- ------------ ----------
Xxxxx
Due Xxxxxx Xxxxx Xxxxxx Xxxx Xxxxxxx Basic
Shares Date Xxxxxxxx Xxxxxx Xxxxxxxx Xxxxxxx Xxxx Investors
------ ---- -------- ------ -------- ------- ---- ---------
250,000 Upon Signing 140,000 10,000 25,000 25,000 21,500 28,500
250,000 90 Days From Signing 140,000 10,000 25,000 25,000 21,500 28,500
250,000 180 Days From Signing 140,000 10,000 25,000 25,000 21,500 28,500
250,000 270 Days From Signing 140,000 10,000 25,000 25,000 21,500 28,500
------------------ ----- ----------------- ------------- ------------ ---------- ---------- ------------ ----------
Total: 1,000,000 560,000 40,000 100,000 100,000 56,000 194,000
------------------ ----- ----------------- ------------- ------------ ---------- ---------- ------------ ----------
(Attached are the names or th8 Stockholders:)
STOCKHOLDERS
Xxxxx Xxxxxx Xxxxxxxx
XX Xxx 00000
Xxxxxxx Xxxxx, XX 00000
SS#: ###-##-####
Xxxxx Xxxxxx
000 X. Xxxxxx Xxxxxx
#X0
Xxxxx Xxxx, XX 00000
SS#: ###-##-####
Xxxxxx Xxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
SS#: ###-##-####
Xxxxxxx Xxxx
00 Xxxx Xxxxx
Xxxxxxxx, XX 00000
SS#: ###-##-####
Xxxx Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
SS#: ###-##-####
Basic Investors, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
ID: 00-0000000
