ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (the "Agreement") is made and entered into as
of the 2nd day of January, 2003 and through the period ending the 3 1st day of
December, 2003 by and between Virtgame Corporation, a Delaware corporation, with
a business address at 0000 Xxxxx Xxxxx Xx, Xxxxx X, Xxx Xxxxx, XX 00000 (the
"Company"), and Lighthouse Financial Group, LLC, a Delaware limited liability
company, with a business address at 000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx,
XX, 00000 (the "Advisor").
RECITALS
1. Advisor has expertise in the area of the Company's financial and
business matters and is willing to provide Advisory services to the
Company.
2. The Company is willing to engage Advisor as an Advisor, and not as an
employee, on the terms and conditions set forth herein.
AGREEMENT
In consideration of the foregoing and of the mutual promises set forth
herein, and intending to be legally bound, the parties hereto agree as follows:
1. ENGAGEMENT.
a. The Company hereby engages Advisor to render, as an
Advisor, the Advisory services described in Exhibit A
hereto and such other services as may be agreed to in
writing by the Company and Advisor from time to time.
b. Advisor hereby accepts the engagement to provide
Advisory services to the Company on the terms and
conditions set forth herein.
2. TERM. This Agreement will commence on the date first written above,
and will continue until December 31, 2003, unless terminated by mutual agreement
of the parties.
3. COMPENSATION.
a. In consideration of the services to be performed by
Advisor, the Company agrees to pay Advisor in the
manner and at the rates set forth in Exhibit A.
b. Out of pocket expenses incurred by Advisor that are
authorized by the Company in advance in writing shall
be reimbursed by Company to Advisor.
4. ADVISOR'S BUSINESS ACTIVITIES.
a. During the term of this Agreement, Advisor will
engage in no business or other activities, which are
or may be, directly or indirectly, competitive with
the business activities of the Company without
obtaining the prior written consent of the Company.
b. Advisor shall devote such time, attention and energy
to the business and affairs of the Company as
requested by the Company.
5. CONFIDENTIAL INFORMATION AND ASSIGNMENTS. Advisor is simultaneously
executing a non-disclosure non-circumvent agreement. The obligations under the
non-disclosure non-circumvent agreement shall survive termination of this
Agreement for any reason.
6. INTERFERENCE WITH THE COMPANY'S BUSINESS.
a. Notwithstanding any other provision of this
Agreement, for a period of one year after termination
of this Agreement, Advisor shall not, directly or
indirectly, employ, solicit for employment, or advise
or recommend to any other person that such other
person employ or solicit for employment, any person
employed or under contract (whether as a Advisor,
employee or otherwise) by or to the Company during
the period of such person's association with the
Company and one year thereafter.
b. Notwithstanding any other provision of this
Agreement, and to the fullest extent permitted by
law, for a period of one year after termination of
this Agreement, Advisor shall not, directly or
indirectly, solicit any clients or customers of the
Company. Advisor agrees that such solicitation would
necessarily involve disclosure or use of confidential
information in breach of the Confidential Information
and Invention Assignment Agreement.
7. REPRESENTATIONS AND WARRANTIES.
a. Advisor represents and warrants (i) that Advisor has
no obligations, legal or otherwise, inconsistent with
the terms of this Agreement or with Advisor's
undertaking this relationship with the Company, (ii)
that the performance of the services called for by
this Agreement do not and will not violate any
applicable law, rule or regulation or any proprietary
or other right of any third party, (iii) that Advisor
will not use in the performance of his
responsibilities under this Agreement any
confidential information or trade secrets of any
other person or entity and (iv) that Advisor has not
entered into or will enter into any agreement
(whether oral or written) in conflict with this
Agreement.
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b. The Company, and each of the companies under its
control (each a -2- "Subsidiary," and collectively,
the "Subsidiaries"), is a corporation duly organized,
validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all
requisite corporate power and authority to own and
lease its properties, to carry on its business as
currently conducted and as proposed to be conducted.
The Company and each subsidiary is duly qualified to
do business in the states or jurisdictions where it
or they are incorporated and/or qualified to do
business, as the case may be. Except as set forth in
Schedule 7(b), there is no jurisdiction in which the
conduct the Company's or Subsidiary's business or
ownership or leasing of its properties requires it to
be qualified to do business as a foreign corporation,
except where such qualifications have been obtained
or the failure to be so qualified would not have a
material adverse effect on the business, financial
condition or prospects of the Company or such
Subsidiary. The Company has all requisite power and
authority to execute and deliver this Agreement and
to carry out the transactions contemplated by this
Agreement, including the issuance of the options
described herein. The Company further represents and
warrants that it will cause the option agreements
furnished by Advisor to be promptly executed, which
agreements shall include in reasonable detail the
terms described in paragraphs 2b. and c. of Exhibit A
hereto.
8. INDEMNIFICATION.
a. Advisor hereby indemnifies and agrees to defend and
hold harmless the Company from and against any and
all claims, demands and actions, and any liabilities,
damages or expenses resulting therefrom, including
court costs and reasonable attorneys' fees, arising
out of or relating to the services performed by
Advisor under this Agreement or the representations
and warranties made by Advisor pursuant to paragraph
7 hereof. Advisor's obligations under this paragraph
8 hereof shall survive the termination, for any
reason, of this Agreement.
b. Company hereby indemnifies and agrees to defend and
hold harmless the Advisor from and against any and
all claims, demands and actions, and any liabilities,
damages or expenses resulting therefrom, including
court costs and reasonable attorneys' fees, arising
out of or relating to the performance of its
obligations under this Agreement or the
representations and warranties made by the Company
pursuant to paragraph 7b. hereof.
9. ATTORNEYS FEES. Should either party hereto, or any heir, personal
representative, successor or assign of either party hereto, resort to litigation
to enforce this Agreement, the party or parties prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted, to
recover its or their reasonable attorneys' fees and costs in such litigation
from the party or parties against whom enforcement was sought.
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10. ENTIRE AGREEMENT. This Agreement, contains the entire
understanding and agreement between the parties hereto with respect to its
subject matter and supersedes any prior or contemporaneous written or oral
agreements, representations or warranties between them respecting the subject
matter hereof
11. AMENDMENT. This Agreement may be amended only by in writing signed
by Advisor and by a representative of the Company duly authorized.
12. SEVERABILITY. If any term, provision, covenant or condition of
this Agreement, or the application thereof to any person, place or circumstance,
shall be held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of this Agreement and such term, provision, covenant or
condition as applied to other persons, places and circumstances shall remain in
full force and effect.
13. RIGHTS CUMULATIVE. The rights and remedies provided by this
Agreement are cumulative, and the exercise of any right or remedy by either
party hereto (or by its successors), whether pursuant to this Agreement, to any
other agreement, or to law, shall not preclude or waive its right to exercise
any or all other rights and remedies.
14. NONWAIVER. No failure or neglect of either party hereto in any
instance to exercise any right, power or privilege hereunder or under law shall
constitute a waiver of any other right, power or privilege or of the same right,
power or privilege in any other instance. All waivers by either party hereto
must be contained in a written instrument signed by the party to be charged and,
in the case of the Company, by an executive officer of the Company or other
person duly authorized by the Company.
15. REMEDY FOR BREACH. The parties hereto agree that, in the event of
breach or threatened breach of this Agreement, the damage or imminent damage to
the value and the goodwill of the Company's business will be inestimable, and
that therefore any remedy at law or in damages shall be inadequate. Accordingly,
the parties hereto agree that the Company shall be entitled to injunctive relief
against Advisor in the event of any breach or threatened breach by Advisor, in
addition to any other relief (including damages and the right of the Company to
stop payments hereunder which is hereby granted) available to the Company under
this Agreement or under law.
16. AGREEMENT TO PERFORM NECESSARY ACTS. Advisor agrees to perform any
further acts and execute and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.
17. ASSIGNMENT. This Agreement may not be assigned by Advisor without
the Company's prior written consent. This Agreement may be assigned by the
Company in connection with a merger or sale of all or substantially all of its
assets, and in other instances with the Advisor's consent which consent shall
not be unreasonably withheld or delayed.
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18. COMPLIANCE WITH LAW. In connection with his services rendered
hereunder, Advisor agrees to abide by all federal, state, and local laws,
ordinances and regulations.
19. ADVISOR. The relationship between Advisor and the Company is that
of Advisor under an advisory arrangement. This Agreement is not authority for
Advisor to act for the Company as its agent or make commitments for the Company.
Advisor will not be eligible for any employee benefits, nor will the company
make deductions from fees to the Advisor for taxes, insurance, bonds or the
like. Advisor retains the discretion in performing the tasks assigned, within
the scope of work specified.
20. TAXES. Advisor agrees to pay all appropriate local, state and
federal taxes.
21. GOVERNING LAW. This Agreement shall be construed in accordance
with, and all actions arising hereunder shall be governed by, the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
THE COMPANY: Virtgame Corporation
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
CFO
THE ADVISOR: Lighthouse Financial Group, LLC
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Managing Member
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Exhibit A
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1. Description of Services to be Rendered:
a. The Company further appoints the Advisor to act in its
behalf to introduce a broker dealer to act as a Placement Agent and to form and
manage a selling group to sell an Offering. The Company maintains the right in
its sole discretion to approve or disapprove any potential member of the selling
group.
b. The Company agrees that the Advisor may act as a Placement
Agent or selling group member in any best-efforts Offering for up to 20% of the
Offering commenced by the introduced broker-dealer.
c. To act as an Advisor for any type of strategic financing
for the Company, whether it is a direct investment into the Company or a bridge
financing. Compensation: to be discussed separately from this Agreement on a
case-by-case basis if Advisor is found to be the Finder of the financing.
d. To assist the Company on introductions to other NYSE and/or
NASD member firms.
e. To assist the Company in current marketing and advertising
contracts.
f. To assist the Company in any road show for the benefit of
any Offering.
2. Compensation:
a. Advisory fee in the amount of $120,000.00 for the term of
this agreement. The payments shall be made in the amount of $ 10,000.00 a month
by wire transfer due on or before the last day of every month.
b. Engagement fee in the amount of 600,000 options of the
common stock of the Company, with a cash-less exercise, exercisable for five (5)
years at $0.50 per share, effective upon execution of this Agreement.
c. Advisory fee in the amount of 600,000 options of the common
stock of the Company, with a cash-less exercise, exercisable for five (5) years
at $0.75 per share, upon execution of this Agreement. The shares underlying the
options (the "Shares") in paragraphs 2b. and c. hereof shall have piggy-back
registration rights at the Company's expense with the right to include such
underlying shares in the Company's next registration statement; provided,
however, if the Company conducts an underwritten "firm commitment" public
offering with gross proceeds of not less than $5.0 million, then the underwriter
may exclude the Shares from such registration statement provided no shares of
any other party other than those being sold to the public are included in the
registration statement, and provided, further, that if the Shares are not
included in a registration statement within one (1) year from the effective date
of such registration statement, the Advisor shall have a "demand" right on one
occasion only at the Company's expense to cause the Company to promptly file a
registration statement and have the Shares included in a registration statement
which the Company shall cause to be declared effective as soon as practicable.
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