Exhibit 99.1
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT (this "Agreement") is made as of the
1st day of August, 2002 between AUGRID OF NEVADA, a Nevada corporation with its
principal address at 0000 X. 00xx Xx., 0xx Xxxxx, Xxxxxxxxx, XX 00000 (the
"Company") and DIVERSIFIED CAPITAL HOLDINGS, LLC, a Delaware limited liability
company with its principal address at 000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx,
Xxx Xxxx 00000 (the "Consultant").
Background
The Company and the Consultant wish to have the consultant provide
strategic management, administrative, financial and marketing advisory services
to the Company, on the terms and conditions set forth in this Agreement.
Accordingly, intending to be legally bound, the parties agree as follows:
1. Appointment. The Company hereby engages the Consultant to provide the
consulting services as described in Section 2.1 below (the "Corporate
Services") during the Term and any Renewal Term (defined in Section 3.1
below), and the Consultant accepts the engagement.
2. Corporate Services.
2.1. During the Term and any Renewal Term, the Consultant will, upon request,
provide to the Company the Corporate Services on an "as needed" basis,
including, but not limited to, those described below:
a. overseeing the Company's relationship with its outside
professionals (i.e.; legal, accounting, investor relations, etc.)
and recommending, when appropriate, new professionals;
b. identifying appropriate new management, advisors and Board
personnel as necessary;
c. assisting management in connection with identifying, evaluating
and negotiating potential investments, acquisitions, strategic
partnerships and/or licensing opportunities for the Company and
its products and services (each a "Strategic Transaction");
d. providing such other related consulting services as requested by
Management and mutually agreeable to the Consultant;
2.2. Staffing. The Consultant will maintain in its employ, or otherwise have
available to it, personnel sufficient in number and adequate in ability to
perform the corporate Services in accordance with this Agreement. The
Consultant will have the exclusive right to direct and control its
personnel and/or third parties providing the Corporate Services, other than
in respect of the Company's right, as the recipient of the Corporate
Services, to supervise the performance of the Consultant under this
Agreement.
2.3. Non-Exclusivity. The Company expressly understands and agrees that the
relationship with the Consultant is on a non-exclusive independent
contractor basis for the Corporate Services and that the Consultant shall
not be prevented, barred or limited from rendering consulting services of
the same nature or of a similar nature to those described in this
Agreement, or of any nature whatsoever, for or on behalf of any person,
firm, corporation, or entity other than the Company during the Term and any
Renewal Term.
2.4. Place of Performance. In connection with the Corporate Services performed
by the Consultant, the Consultant's activities shall be principally based
in its Melville office, except for required and approved travel on the
Company's behalf.
3. Term and Termination.
3.1 Term. Unless terminated earlier under Section 3.2 (a) below, the term of
this Agreement will be eighteen (18) months (the "Term") commencing June 1,
2002 (the "Effective Date"). The Term may be renewed for an additional
twelve (12) month period (the "Renewal Term") upon terms and conditions
mutually agreed upon at least thirty (30) days prior to the end of the
Term.
3.2 Termination.
(a) This Agreement may be terminated prior to the expiration of the
Term or any Renewal Term by (i) either party if a material breach
to this Agreement by the other party is not effectively cured
within 30 days (the "Cure Period") from receipt of written notice
of the breach from the non-breaching party; and (ii) upon mutual
written agreement.
(b) The date of termination (the "Termination Date") shall be defined
to mean; (i) with regard to Section 3.2 (a) (i), the date upon
which the Cure Period expires and there has been no cure, (ii)
with regard to Section 3.1, the last day of the Term, or any
Renewal Term.
3.3 Effect of Termination.
(a) Termination under Section 3.2 will not affect any other remedy or
damages available to either of the parties. Upon termination of
this Agreement, no party will have any further obligation to
fulfill commitments under this Agreement, except for those
obligations set forth in this Section 3 and in Sections 5,6, 7, 8
and 9, each of which expressly survive the termination of this
Agreement.
(b) Upon the termination of this Agreement for any reason, the
Company shall pay to the Consultant any earned but unpaid
Consulting Fees (defined hereafter), up through the appropriate
Termination Date, and any un-reimbursed expenses incurred by the
Consultant up through the appropriate Termination Date. In
addition, if this Agreement is terminated by the Consultant
pursuant to Section 3.2(a)(i) above, (i) the Company shall pay to
the Consultant on the Termination Date, in a lump sum, an amount
equal to the Consulting Fees which would have been paid to the
Consultant for the period commencing on the Termination Date and
ending on the last day of the Term or Renewal Term, as the case
may be.
4. Compensation
4.1 Stock Grant. Within 5 calendar days of the effective date hereof, the
Company shall issue an S-8 filing and deliver to the Consultant 75,000
shares of the Company's common stock (the "Shares"), which, when issued to
Consultant shall be accrued against the total compensation due to the
Consultant over the life of the agreement.
4.4 Expenses. The Consultant shall be promptly reimbursed for all reasonable
out-of-pocket expenses (including travel, entertainment, etc.) incurred by
it in its performance under this Agreement, upon submission of
documentation supporting such expense(s).
5. Strategic Transaction Services The Consultant, or an affiliate, may provide
the Company, if so requested, with finder services which may include the
identification and introduction to the Company of parties that would be
interested in completing an investment, acquisition, strategic partnership,
joint venture and/or licensing opportunity ("Strategic Transaction") with
the Company. Accordingly, if the Consultant introduces the Company (or any
of its subsidiaries or affiliates) to a party that, during the Term, any
Renewal Term or during the one (1) year period following the Termination
Date, completes, or enters into a letter of intent to complete, a Strategic
Transaction (as set forth below) in which;
i. the introduced party makes an investment in, or provides
financing to, the Company through the purchase of its securities;
and/or
ii. the introduced party enters into a partnership, joint venture, or
licensing agreement or any other agreement for the mutual
exploitation of any asset of the Company; and/or
iii. the Company invests in, merges with or acquires the introduced
party, or, the introduced party merges with or acquires the
Company.
The Company will pay to the Consultant, or an affiliate, an investment
banking fee (which shall include a cash and Warrant component) with respect
to each and every transaction undertaken by the Company with each party
during such time period, that will be mutually agreed to prior to such
introduction and which will reflect a customary industry fee arrangement.
6. Indemnification.
6.1 Indemnification by the Company. The Company will indemnify, defend and save
harmless the Consultant, its parent, affiliates or subsidiaries, their
respective directors, officers, stockholders, employees and agents
(collectively, the "Consultant Indemnitees") from and against any and all
demands, claims, actions or causes of action, assessments, deficiencies,
taxes, losses, damages, liabilities, costs and expenses, including without
limitation, interest penalties and reasonable attorneys' fees and expenses
(collectively "Losses") of any nature whatsoever, liquidated or
unliquidated, that are asserted against, resulting from, imposed upon or
incurred by any Consultant Indemnitees and arise out of or in connection
with the performance of any of the Consultant Indemnitees' obligations
under this Agreement unless the claim or alleged claim resulted from
willful misconduct, negligence or fraud of the Consultant Indemnitees. The
Company agrees that, without the Consultant Indemnitees' prior written
consent, it will not settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification could be sought under this Section 6.1
(whether or not the Consultant Indemnitees are actual or potential parties
to such claim, action or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Consultant Indemnitee
from all liability arising out of such claim, action or proceeding.
6.2 Indemnification by the Consultant. The Consultant will indemnify, defend
and save harmless the Company, its directors, officers, stockholders,
employees and agents (collectively, the "Company Indemnitees") from and
against any and all demands, claims, actions or causes of action,
assessments, deficiencies, taxes, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and reasonable
attorneys' fees and expenses (collectively "Losses") of any nature
whatsoever, liquidated or unliquidated, that are asserted against,
resulting from, imposed upon or incurred by any Company Indemnitees and
arise out of or in connection with any claim or alleged claim of resulting
from the willful misconduct, negligence or fraud of the Consultant or
Consultants. The Consultant agrees that, without the Company Indemnitees'
prior written consent, it will not settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or
proceeding in respect of which indemnification could be sought under this
Section 6.2 (whether or not the Company Indemnitees are actual or potential
parties to such claim, action or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each Company
Indemnitee from all liability arising out of such claim, action or
proceeding.
6.3 Procedures. As to any claim or lawsuit with respect to which a party seeks
indemnification hereunder (the "Indemnified Party"), it shall provide
prompt notice thereof to the other party (the "Indemnifying Party"), and
the Indemnifying Party shall have the right to control the defense of said
lawsuit, including the selection of attorneys, and any settlement thereof,
provided that no settlement which impairs the rights of the Indemnified
Party shall be made without its prior written consent, which consent shall
not be unreasonably withheld.
7. Binding Arbitration.
a) Any dispute between the Company and the Consultant concerning matters
that are the subject of or arise from this Agreement will be submitted
to binding expedited arbitration in accordance with the commercial
Arbitration Rules of the American Arbitration Association (the "AAA
Arbitration Rules") in effect from time to time. Where no remedy for a
particular breach is specified in this Agreement, the arbitrator,
subject to any limitations set forth in the applicable agreement, will
have the power to fashion an appropriate remedy consistent with the
spirit and intent of this Agreement. Any disputing party may serve the
other disputing party or parties with a demand to commence binding
arbitration ("Arbitration Demand"). The arbitrator will be selected by
mutual agreement of the disputing parties. If the disputing parties
are unable to agree upon an arbitrator within 20 days after the date
on which the Arbitration Demand is served, then the Arbitrator will be
selected in accordance with the AAA Arbitration Rules.
b) The arbitration will be held in New York County and be governed by the
laws of the State of New York, and judgment upon the award rendered by
the arbitrator may be entered by any court having jurisdiction
thereof. The disputing parties will cooperate fully to ensure the
entry of the arbitrator's award by a court of competent jurisdiction.
Once the arbitrator's award has been entered by a court of competent
jurisdiction, the arbitrator's award will have res judicata and
collateral estoppel effect, and the disputing parties will not seek or
assert the right in any manner whatsoever to challenge the validity of
the arbitration or relitigate issues adjudicated by the arbitrator.
8. Covenants
8.1 Confidentiality. With respect to information of the Company, which is
clearly marked "Confidential", whatever its nature and form and whether
from Graphic Materials (as defined below) or otherwise (except such as is
generally available through publication or is previously known to the
Consultant, or is lawfully obtained by the Consultant through a
third-party), obtained by the Consultant during or as a result of its
consultancy with the Company and relating to any invention, improvement,
enhancement, product, know-how, formula, software, process, design, or
other creation, or to any use of any of them, costs (including, without
limitation, manufacturing costs), prices, or to any plans of the Company,
or to any other trade secret or proprietary information of the Company, the
Consultant agrees:
a) to hold all such information, inventions and discoveries which have
not otherwise become public knowledge in strict confidence and not to
publish or otherwise disclose any thereof to any person or entity
other than the Company except with the prior written consent of an
officer of the Company, or as may be required by law.
b) to take all reasonable precautions to assure that all such
information, inventions and discoveries are properly protected from
access by unauthorized persons.
c) to make no use of nor exploit in any way any such information,
invention or discovery except as required in the performance of its
consultancy for the Company.
For the purposes of this Agreement, the term "Graphic Materials" includes,
without limitation, letters, memoranda, reports, notes, notebooks, books of
account, drawings, prints, specifications, formulae, software, data
print-outs, microfilms, magnetic tapes and disks and other documents and
recordings, together with all copies, excerpts and summaries thereof.
8.2 Further Assurances. The Company and Consultant will use their best
efforts to implement the provisions of this Agreement, and for such
purpose neither party shall represent to the other any material facts
concerning itself during the Term and any Renewal Term which are
false, misleading or untrue and neither party shall intentionally fail
to provide the other with material facts concerning itself or will in
any material manner prevent the Services from being performed under
this Agreement.
9. Miscellaneous.
9.1 Limitation of Liability. IT IS UNDERSTOOD BETWEEN THE PARTIES THAT NEITHER
THE CONSULTANT NOR ANY OF ITS PARTNERS, EMPLOYEES, AGENTS, OR PRINCIPALS
ARE PROVIDING LEGAL SERVICES, AUDITING SERVICES, NOR BROKERAGE SERVICES,
AND SUCH SERVICES MUST BE RETAINED BY THE COMPANY AT ITS OWN COST AND
EXPENSE. IT IS EXPRESSLY ACKNOWLEDGED THAT THE CONSULTANT WILL UTILIZE ITS
BEST EFFORTS IN PERFORMING THE SERVICES CONTEMPLATED HEREBY BUT NO
REPRESENTATIONS ARE MADE OR GUARANTEE GIVEN BY THE CONSULTANT AS TO THE
AMOUNT OF TIME IT WILL SPEND IN PROVIDING THE SERVICES NOR TO THE ULTIMATE
SUCCESS OF ANY SERVICE, TRANSACTION OR OTHER ACTION UNDERTAKEN BY THE
COMPANY. IN NO EVENT WILL THE AGGREGATE DAMAGES CLAIMED BY THE COMPANY
UNDER THIS AGREEMENT EXCEED THE TOTAL CASH FEES RECEIVED BY THE CONSULTANT,
EXCEPT IN THE CASE OF WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR ACTUAL FRAUD.
9.2 Notices. All notices and other communications provided for or permitted in
this Agreement will be made in writing by hand-delivery, registered
first-class mail, or courier guaranteeing overnight delivery:
If to the Company to:
Augrid of Nevada, Inc.
0000 X. 00xx Xx.
0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn.: X.X. Xxxxxxx, President
If to the Consultant to:
Diversified Capital Holdings, LLC
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
or at such other address as any party specifies by notice given
to the other parties in accordance with this Section 9.2.
All notices and communications will be deemed to have been duly
given; at the time delivered by hand, if personally delivered;
three business days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, and on the next
business day if timely delivered to a courier guaranteeing
overnight delivery; provided, however, that the inability to
deliver any notice or other communication because of the changed
address of which no notice was given, or rejection or refusal to
accept any notice or other communication as of the date if such
inability to deliver or rejection or refusal to accept delivery.
9.3 Waivers. The failure of a party to this Agreement to insist upon strict
adherence to any of the terms of this Agreement on any occasion will not be
considered a waiver, or deprive that party of the right thereafter to
insist upon strict adherence to that term or other term of this Agreement.
Any waiver must be in writing.
9.4 Force Majeure. The Consultant will not be responsible for any failure or
delay in performance of its obligations under this Agreement because of
circumstances beyond its reasonable control including acts of God, fires,
floods, wars, civil disturbances, sabotage, accidents, labor disputes
(whether or not the employees' demands are reasonable and within the
party's power to satisfy), governmental actions or transportation delays.
9.5 Governing Law. This Agreement, the rights of the parties in, under and to
this Agreement and any dispute or action relating to this Agreement
(whether in contract, tort or otherwise) will be governed by, construed and
enforced in accordance with the laws of New York applicable to the
agreements made and performed entirely in that State. Any legal actions,
suits or proceeding arising out of this Agreement (whether arising in
contract, tort or otherwise) other than any claim, action, dispute or
controversy subject to arbitration under Section 7 hereof, will be brought
exclusively in a federal or state court located in the State of New York
having jurisdiction of those courts with respect to any legal actions,
suits or proceeding (whether arising in contract, tort or otherwise)
arising out of this Agreement. In the event of any legal action, suit or
proceeding, the parties waive their right to a jury trail.
9.6 Entire Agreement; Amendments. This Agreement represents the entire
understanding of the parties and supercedes and cancels any and all prior
negotiations, undertakings and agreements between (i) the parties; and/or
(ii) Crossover Advisors, LLC and the Company, whether written or oral, with
respect to the subject matter of the Agreement. This Agreement may be
amended, modified, waived or terminated only by a written instrument signed
by both parties to this Agreement.
9.7 Binding Effect. This Agreement will inure to be the benefit of and will be
binding upon the parties their respective successors, permitted transferees
and assigns.
9.8 Assignment and Benefits of Agreement. This Agreement may not be assigned by
any party to this Agreement without the written consent of the other party.
Nothing in this Agreement, express or implied, is intended to confer upon
any person other that the parties hereto, and their said successors and
assigns, any rights under or by reason of this Agreement.
9.9 Independent Contractor. Each of the Company and the Consultant certifies
that neither party has any authority to act for or bind the other party
except as expressly provided for in this Agreement, that the Consultant may
work for others, and that any persons provided by the Consultant under this
Agreement will be solely the employees or agents of the Consultant under
its sole and exclusive direction and control.
9.10 Severability. To the extent that any provision of this Agreement or the
application thereof is determined by a court of competent jurisdiction to
be invalid or unenforceable, the remainder of this Agreement, or the
application of such a provision under other circumstances, will be
unaffected and will continue in full force and effect unless the invalid or
unenforceable provision is of such essential importance for this Agreement
that it is to be reasonably assumed that the parties would not have
concluded this Agreement without the invalid or unenforceable provision.
9.11 Consents. Any consent or approval to be given under this Agreement may be
delegated by the party to give such consent or approval to any agent or
representative as such party may, from time to time, authorize in writing.
9.12 Counterparts. This Agreement may be executed in any number of counterparts,
and each of the parties on separate counterparts, each of which, when so
executed, will be deemed an original, not all of which will constitute but
one and the same original.
9.13 Third Parties. Nothing in this Agreement, expressed or implied, is intended
or will be construed to confer upon or give any person other than parties
to this Agreement, their permitted successors or assigns and (to the extent
indicated herein) any rights or reminded under or by reason of this
Agreement.
9.14 Further Assurances. Each party will take or perform such actions as
reasonable requested by the other party, including the execution of any
additional documents, in order to carry out the intent of, and to
facilitate and effectuate the actions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
AUGRID OF NEVADA, INC.
By: ________________________
Name: X.X. Xxxxxxx
Title: President
DIVERSIFIED CAPITAL HOLDINGS, LLC
By: _________________________
Name: Xxxxx X. Xxxxxxx
Title: President
