Contract
Exhibit 10.3
THIS MANAGEMENT AGREEMENT
(“Agreement”) is dated July 22, 2008 (“Effective Date”) by and between
UNIVERSAL CAPITAL MANAGEMENT,
INC., a Delaware corporation (“Manager”), and THEATER XTREME ENTERTAINMENT GROUP,
INC., a Florida corporation (“TXEG” or “Company”).
BACKGROUND
TXEG
desires to obtain from the Manager, and the Manager is willing and able to
provide to TXEG, management services and other assistance in accordance with and
subject to the terms and conditions set forth in this Agreement.
For and
in consideration of the mutual benefits and covenants set forth below, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Appointment as
Manager
(a)
TXEG hereby engages Manager to provide management services and other assistance
in accordance with the terms of this Agreement. The Manager shall and
hereby agrees to devote such time as is reasonably necessary to provide such
services and assistance.
2. Scope of
Services
(a)
Manager hereby agrees to provide to TXEG the following services (as amended from
time to time, collectively, the “Services”):
(i) Strategic
Planning. Manager shall assist TXEG management in the strategic
planning process to include but not be limited to analysis of potential markets,
competition, product marketing approaches, pricing and future product
utility.
(ii) Investor
Relations: Manager will assist TXEG in retaining the services of a
qualified Investor Relations company or manager suitable for providing marketing
and public relations services in the investor community on behalf of
TXEG.
(iii) Optional
Services. The following services are available to be provided by
Manager. It is not anticipated that these services will be utilized
by TXEG, but are available upon request.
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A.
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Significant
Managerial Assistance. Upon TXEG’s request, Manager may provide
TXEG with day to day managerial assistance on issues such as employment,
payroll, and benefits; real estate leasing; utility utilization; capital
expenditures; personnel; and other related
matters.
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B.
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Financial
Reporting Services. Upon TXEG’s request, Manager may assist in
providing TXEG on a quarter-annual basis a balance sheet, income statement
and statement of cash flow for TXEG. Such financial reports
shall be completed not later than thirty (30) days after the end of the
quarter-annual period reported on. Income statements will be
based on generally accepted accounting principles as in effect in the
United States of America, consistently applied from period to period and
in accordance with the terms of contracts and service
agreements.
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C.
Tax
Reporting Services. Upon TXEG’s request, Manager may assist in the
preparation of sales and use tax returns for all jurisdictions in which TXEG is
then subject to reporting as determined by TXEG for goods or services
sold. If such services are requested, Manager shall provide TXEG with
the amount of such liability not later than the 10th
business day of each calendar month in which a sales/use tax liability is due to
be paid TXEG.. Such returns shall be delivered to TXEG for execution
no later than three (3) days prior to the filing due date for any such
return.
D.
Accounts
Payable Services.
(I.) Upon
TXEG’s request, Manager may assist TXEG in providing for the usual and ordinary
business aspects of the accounts payable process for TXEG, including but not
limited to:
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i.
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Maintaining
vendor master
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ii.
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Processing
vendor invoices
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iii.
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Executing
vendor payments from
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TXEG’s
funds
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iv.
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Processing
travel expense reports
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v.
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Executing
employee payments for
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travel
expense from funds
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vi.
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Stop
payment administration
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vii.
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1099
Misc. reporting
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viii.
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Invoice
filing
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ix.
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Documentation
retention
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(II.) Upon
TXEG’s request, Manager may assist TXEG with its outstanding accounts payable
based upon contracted payment terms and consistent with past business
practice.
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(b)
Investment
Banking Consultation and Investor Introduction Services. Manager is not
registered at this time as a securities broker or dealer, and represents and
warrants that such registration is not required. Manager further
represents that it does not have an affiliation with any securities brokerage
firm. As a result, the Company understands that, while the Manager
will introduce the Company to qualified persons and/or institutions who indicate
a serious interest in pursuing a possible financing transaction for the Company
within the parameters established by the Company, the Manager will not be
involved in conducting negotiations for the Company with any such persons,
handling any funds or securities, or performing services that would constitute a
business of effecting transactions in securities under applicable federal or
state law. Manager further represents and warrants that it has not
acted as a broker or finder in any other sale of securities and does not intend
to participate in any distribution of securities after any transaction under
this Agreement.
(c)To
the extent that Manager is able in the ordinary course of business, Manager
shall provide or cause to be provided, and shall be responsible for said costs
associated with, all personnel, facilities, equipment, systems and management
necessary or appropriate to provide such Services. In no event will
Manager be required to stay in business or take other extraordinary measures
solely to provide the Services to TXEG; provided, that Manager shall provide
Services pursuant to this Agreement in the same order of priority as it provides
the same or similar services to its own departments, and provided TXEG is
notified in advance of any delay and the Services are provided to TXEG at the
next available opportunity.
(d) During
the Term of this Agreement, TXEG may from time to time request that Manager
provide special services or projects in addition to the Services identified in
this Section 2, and Manager may in its sole discretion agree to provide such
additional services or projects. If Manager agrees to provide such
additional services or projects, the Parties shall negotiate in good faith to
establish the terms (including, without limitation, price) for providing such
additional services or projects, and following agreement on such terms, this
Section 2 shall be amended to include such additional services and
projects.
3. Term and
Termination
(a) This
Agreement shall be effective as of the Effective Date and, subject to the
provisions of section (b) of this Section 3, shall terminate after one (1) year
(the “Term”). The Term
shall be automatically extended from year to year in the absence of ninety (90)
days’ notice from one party to the other.
(b) Notwithstanding
the provisions of subsection (a) of this Section 3, (i) Manager can terminate
this Agreement at any time upon thirty (30) days’ notice to TXEG upon TXEG’s
failure to pay the amounts required hereunder, and (ii) TXEG can terminate this
Agreement after thirty (30) days’ notice to Manager of Manager’s material
failure to fulfill its obligations hereunder and Manager’s failure to correct
such failure during such time period.
4. Compensation.
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(a) TXEG
shall pay Manager for the Services by delivering to Manager Two Million Five
Hundred Thousand (2,500,000) Shares of common stock of TXEG within thirty (30)
days of the Effective Date, which shares TXEG intends to include, to the extent
practicable, in TXEG’s next Registration of its shares with the Securities and
Exchange Commission.
(b) In
addition, TXEG shall reimburse Manager for third party and out-of-pocket
expenses actually and reasonably incurred by Manager as an adjunct to and as a
supplement to Manager’s responsibility for performing the Services for which
Manager is being paid compensation described herein, and which are approved in
advance by TXEG; provided that expenses of Affiliates of Manager shall not be
deemed third party expenses for purposes of this Section 4.
5. Non-Exclusive
Contract
. The
Manager acts as adviser to other clients and may give advice, and take action,
with respect to any such client which may differ from the advice given, or the
timing or nature of action taken, with respect to TXEG.
6. Delegation and
Assignment
. With
TXEG’s prior written consent, which consent shall not be unreasonably withheld
or delayed, Manager may delegate all or part of its duties to perform Services
hereunder; provided, that Manager’ costs associated with any duties so delegated
shall not be deemed out-of-pocket expenses added to the price of Services
pursuant to Section 4. Notwithstanding the foregoing, Manager shall
be entitled to delegate all or any part of its duties to one or more of its
Affiliates upon notice to TXEG; provided, however, that Manager and its designee
Affiliate(s) shall be jointly and severally liable for performance of Manager’s
obligations under this Agreement. TXEG shall not assign or
subcontract its rights, duties, or obligations under this
Agreement.
7. Confidential Information;
Ownership
(a) Each
party shall treat as confidential all Confidential Information of the other
party that comes to its knowledge through this Agreement. Each party
shall take such steps to prevent disclosure of such Confidential Information to
any third person as it would take in protecting its own proprietary or
confidential information and shall not use any portion of such Confidential
Information for any purpose not authorized herein. All Confidential
Information of each party and any information containing a party’s Confidential
Information shall at all times, remain the exclusive property of that
party.
(b) No
party shall be under any obligations with respect to any Confidential
Information:
(i) which
is, at the time of disclosure, available to the general public;
(ii) which
becomes at a later date available to the general public through no fault on the
part of such party and then only after such later date;
(iii) which
such party can demonstrate was in its possession before receipt from the other
party; or
(iv) which
is disclosed to such party without restriction on disclosure by a third party
who has the lawful right to disclose such information.
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(c) The
confidentiality obligations of this Section 7 shall survive the termination of
this Agreement.
8. Independent
Contractor
. Manager
is and shall remain at all times an independent contractor of TXEG in the
performance of all Services hereunder, and all persons employed by Manager to
perform such Services shall be and remain employees solely of Manager and
subject only to the supervision of Manager’s supervisory
personnel. With respect to Manager’s employees providing
services under this Agreement, Manager shall be responsible for the payment of
all salaries and benefits and all income taxes, social security taxes,
employment compensation taxes and other employment taxes and withholdings with
respect to such employees and all fringe benefits program expenses, such as
insurance costs, pension or retirement plans, vacation, sick leave and similar
matters, with respect to such employees. Manager shall be entitled to
determine which of its employees shall provide the Services.
9. Force
Majeure.
(a) Neither
party shall be liable for any loss or damage for delay or non-performance under
this Agreement resulting from the operation of any applicable law, rule,
ordinance or regulation of any governmental entity or regulatory agency, or from
any requirement or intervention of civil, naval or military authorities or other
agencies of the government, or by reason of any other causes whatsoever not
reasonably within the control of such party, including, but not limited to, acts
of God, war, riot, insurrection, civil violence or disobedience, blockages,
embargoes, sabotage, epidemics, fire, strikes, lock-outs or other industrial or
labor disturbances, lightning, hurricanes, cyclonic storms, explosions and delay
of carriers; provided, that the affected party notifies the other party promptly
of the occurrence of the cause and thereafter exerts reasonable commercial
efforts to overcome the cause of prevention and hindrance and to resume
performance; and provided, further, that the settlement of strikes, lock-outs
and other industrial or labor disturbances shall be entirely within the
discretion of the affected party, and the affected party shall not be required
to make settlement of strikes, lock-outs and other industrial or labor
disturbances by acceding to the demands of any opposing third party or parties
when such course is unfavorable in the affected party’s judgment.
(b) If
Manager’s performance under this Agreement is suspended or rendered impractical
by reason of any cause covered by subsection (a) of this Section 9 (“Force Majeure”) for a period
in excess of twenty (20) days, TXEG shall have either the right to
terminate this Agreement with respect to the disrupted Services immediately upon
written notice to Manager or require that the Agreement continue in force for
that period of time beyond the Term that such Force Majeure condition existed
during the Term without incurring any obligation by TXEG for additional payment
for Services by Manager. An event of Force Majeure shall not
otherwise limit amounts payable for Services rendered on or prior to the actual
date of the event of Force Majeure.
10. Limitation of
Liability
. Notwithstanding
any other provision of this Agreement to the contrary, Manager shall not be
liable to TXEG by reason of any error of omission or commission, performance or
failure to perform or delay in performing any Services under this Agreement,
for special, incidental or consequential damages, suffered by TXEG
beyond a refund to TXEG of all charges paid and/or shares issued by TXEG to
Manager for the Services that caused such damages, unless Manager shall have
committed gross negligence or willful misconduct. The provisions of
this Section 10 shall survive termination of this Agreement.
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11. Manager’s
Investment Representations. Manager hereby represents and
warrants to and with TXEG that:
(a) Manager
will be acquiring the Shares for its own account as principal and not with a
view to, or for sale in connection with, any distribution of all or any of such
Shares. Manager hereby agrees that it will not, directly or
indirectly, assign, transfer, offer, sell, pledge, hypothecate or otherwise
dispose of all or any of such Shares (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of any of such Shares) except in accordance
with the registration provisions of the Securities Act of 1933 (the “Securities
Act”) or an exemption from such registration provisions or any applicable
securities laws.
(b) Manager
(i) is knowledgeable and experienced with respect to the financial, tax and
business aspects of the ownership of investments such as the Shares and of the
business contemplated by TXEG and is capable of evaluating the risks and merits
of acquiring the Shares and in making a decision to proceed with this
investment, has not relied on any representations, warranties or agreements of
TXEG or others, and (ii) can bear the economic risk of an investment in Shares
for an indefinite period of time and can afford to suffer the complete loss
thereof.
(c) Manager
has evaluated the risks involved in investing in the Shares and has determined
that the Shares are a suitable investment for Manager. Specifically,
the aggregate amount of the investments the Manager has in and Manager’s
commitments to, all similar investments that are illiquid is reasonable in
relation to Manager’s net worth, both before and after the acquisition of the
Shares pursuant to this Agreement.
(d) Manager
understands and acknowledges that the Shares have not been registered under the
Securities Act or any state securities laws and are being offered and sold in
reliance on exemptions provided in the Securities Act and state securities laws
for transactions not involving any public offering and, therefore, cannot be
resold or transferred unless they are subsequently registered under the
Securities Act and such applicable state securities laws or unless an exemption
from such registration is available. Manager also understands that
TXEG does not have any obligation or intention to register the Shares for sale
under the Securities Act or any state securities laws or of supplying the
information which may be necessary to enable the Manager to sell Shares and that
Manager has no right to require the registration of the Shares under the
Securities Act, any state securities laws or other applicable securities
regulations.
(e) Manager
has no contract, understanding, agreement or arrangement with any person to
sell, transfer or pledge to such person or anyone else any of the Shares which
the Manager will acquire pursuant to this Agreement and that Manager has no
present plans to enter into any such contract, undertaking, agreement or
arrangement.
12. Definitions
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(a) “Affiliate”
means, with respect to a Person, another Person who controls, is controlled by
or is under common control with the first such Person.
(b) “Confidential
Information” means any and all information of either party that might reasonably
be considered confidential, secret, sensitive, proprietary or private. To the
extent practical, Confidential Information shall be marked “proprietary” or
“confidential.” Confidential Information shall include the
following:
(i) data,
know-how, formulae, processes, designs, sketches, photographs, plans, drawings,
specifications, samples, reports, lists, financial information, studies,
findings, inventions and ideas, computer programs and software, or proprietary
information relating to either party or the methods or techniques used by either
party;
(ii) data,
documents or proprietary information employed in connection with the marketing
and implementation of each party’s products, including cost information,
business policies and procedures, revenues and markets, distributor and customer
lists, and similar items of information; and
(iii) any
other data or information obtained by either party during the term of this
Agreement which is not generally known to and not readily ascertainable by
proper means by third persons who could obtain economic value from its use or
disclosure.
(c) “Control”
means the ability, through stock ownership, contract, or otherwise, to control
the business or officers of a Person.
(d) “Damages
and Expenses” means costs, liabilities, and expenses incurred in investigating,
defending, and paying settlements or judgments with respect to claims (including
reasonable attorneys’ fees).
(e) “Holiday”
means for purposes of this Agreement, a day, other than a Saturday or Sunday, on
which national banks with branches in the Commonwealth of Pennsylvania are or
may elect to be closed.
(f) “Person”
means an individual or entity.
(g) “Shares”
means shares of common stock of TXEG, par value $0.001 dollars per share
acquired by Manager pursuant to this Agreement.
13. Miscellaneous.
(a) Indulgences,
Etc. Neither the
failure nor any delay on the part of either party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
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(b) Controlling
Law. This Agreement
and all questions relating to its validity, interpretation, performance and
enforcement (including, without limitation, provisions concerning limitations of
actions), shall be governed by and construed in accordance with the laws of the
State of Delaware, notwithstanding any conflict-of-laws doctrines of any
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.
(c) Notices. All notices,
requests, demands and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given, made
and received only when delivered (personally, by courier service such FedEx or
by other messenger) against receipt or upon actual receipt of registered or
certified mail, postage prepaid, return receipt requested, addressed as set
forth below:
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If
to:
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Manager
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Universal
Capital Management, Inc.
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0000
Xxxxxx Xxxxx
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Xxxxx
00
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Xxxxxxxxxx,
XX 00000
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Attention:
Xxxxxxx X. Xxxxx
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If
to:
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000
Xxxxxxxxx Xxxx, Xxxxxx X & X
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Xxxxxx,
XX 00000
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Attention:
Xxxxxx Xxxxxxxxx
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In
addition, notice by mail shall be sent by a reputable international courier
(such as FedEx) if posted outside of the continental United
States. Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this subparagraph for the giving of notice.
(d) Binding
Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(e) Provisions
Separable. The provisions of
this Agreement are independent of and separable from each other, and no
provision shall be affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may be invalid or
unenforceable in whole or in part.
(f) Entire
Agreement. This Agreement
contains the entire understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral or
written, except as herein contained. The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent
with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.
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(g) Section
Headings. The
Section and subsection headings in this Agreement have been inserted for
convenience of reference only; they form no part of this Agreement and shall not
affect its interpretation.
(h) Gender,
Etc. Words used
herein, regardless of the number and gender specifically used, shall be deemed
and construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context indicates is
appropriate.
(i) Number of
Days. In computing the
number of days for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and Holidays; provided, however, that if the final
day of any time period falls on a Saturday, Sunday or Holiday, then the final
day shall be deemed to be the next day which is not a Saturday, Sunday or
Holiday.
IN WITNESS WHEREOF, the
Parties hereto have executed this Management Agreement
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Universal
Capital Management, Inc.
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By: Xxxxxx
Xxxxxxxxx signature on file
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By:
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Name: Xxxxxx
Xxxxxxxxx
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Name:
Xxxxxxx X. Xxxxx
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Title:
Chairman, President & Chief Executive Officer
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Title:
President and CEO
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