EXHIBIT 10.5
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Consulting Agreement
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Consulting Agreement, dated as of January 10, 2005 (this "Agreement"), by and
between Philabelle Consulting, LLC ("Consultant"), a New Jersey limited
liability company having an office located at 00 Xxxxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 and Xxxxxx Xxxxxxx Promotions, Inc., a Delaware
corporation (the "Company"), having an office located at 0000 0xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
RECITALS:
Consultant has performed consulting services for the Company and its affiliated
entities (the Company and its affiliated entities sometimes collectively, the
"CKP Entities") and the Company wishes to compensate the Consultant to perform
consulting services for the CKP Entities in connection with business operations
and activities of the CKP Entities. The CKP Entities are currently in the
business of promotional and other activities in connection with boxing and
entertainment-related events, including the production, financing and marketing
of motion pictures and video, and may engage in activities related to any of the
foregoing (the "Business").
Consultant wishes to perform such consulting services for the CKP Entities, upon
the terms and provisions and subject to the conditions, set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein, and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
1. Services. The Company hereby retains and engages Consultant, and Consultant
hereby accepts such engagement, to continue to provide consulting services to
the CKP Entities in connection with the Business. The consulting services to be
provided by Consultant to the CKP Entities (the "Services") during the
Consulting Period (as such term is defined herein) shall consist of the
following: (a) to advise and consult the CKP Entities regarding general business
matters including, but not limited to, the evaluation and analysis of management
needs, strategic business planning and other business that the Company may ask
the Consultant to undertake.(b) to assist the CKP Entities with negotiations of
contracts and documentation and work with the Company's legal and accounting
advisors in transactions; provided, however, that Consultant shall not perform
or engage in any services in connection with the offer or sale of securities by
the Company in capital-raising activities, or any services which, directly or
indirectly, promote or maintain a market for the Company's securities.
Consultant agrees to devote such business time toward the performance of its
duties hereunder as it deems reasonably necessary. It is not intended that the
performance of the Services shall require full time and effort by Consultant or
any of its employees. The Company acknowledges that Consultant and/or its
affiliates have provided and will provide consulting advice (of all types
contemplated by this Agreement and otherwise) to other third parties, as well as
to the Company and, consequently, the activities of the Consultant are
non-exclusive.. Nothing herein contained shall be construed to limit or restrict
Consultant in conducting such business with respect to others, or in rendering
such advice to other third parties. It is contemplated that the Services of
Consultant shall be performed in the New York metropolitan area, and nothing
shall require Consultant to attend meetings more frequently than three business
days in any calendar month. In the event Consultant is requested to provide
Services outside of the New York City Metropolitan area, the Company shall
provide Consultant with air transportation to and from the location outside the
New York City Metropolitan area as well as business class hotel accommodations,
and shall reimburse Consultant for its reasonable business expenses in
connection with such Services. The Company shall advise Consultant in advance of
the date, time and place of any contemplated meeting and Consultant's attendance
at any such meeting shall be subject to Consultant's prior commitments.
2. Remuneration. In consideration of the Services previously provided to the
Company by the Consultant and for future Services, the receipt and adequacy of
which has been acknowledged and agreed to by the Company, the Company shall pay
the Consultant as follows:
(a) Simultaneously with the execution of this Agreement, the Company
covenants and agrees to immediately reserve for issuance to Consultant three
million (3,000,000) shares (the "Shares") of its common stock, par value $.01
per share ("Common Stock"). Simultaneously with the execution of this Agreement,
the Company shall issue a certificate representing the Shares issued in the name
of the Consultant and, following such issuance, the Consultant shall own all
right, title and interest in and to the Shares.
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(b) Subject to the provisions contained in Section 2(a) above, the Company
represents and warrants to the Consultant that: (i) all Shares, when issued
hereunder, shall be deemed issued to Consultant as fully paid and non-assessable
Shares, and Consultant shall have all of the rights of a stockholder of the
Company with respect thereto, including the right to vote, receive dividends
(including stock dividends), participate in stock splits or other
recapitalizations, and exchange such shares in a merger, consolidation or other
reorganization, and (ii) the Shares issuable to the Consultant shall include all
securities received in replacement of the Shares, as a stock dividend or as a
result of any stock split, recapitalization, merger, reorganization, exchange or
similar transaction, and all new, substituted or additional securities or other
properties to which Consultant would have been entitled if Consultant owned such
shares as of the date hereof.
(c) In addition to the Shares, Company covenants and agrees to issue to the
Consultant warrants to purchase an aggregate of twelve million (12,000,000)
shares of Common Stock ("Warrants"), at an initial exercise price of $0.10 cents
per share. The Warrants shall provide for cashless exercise. Notwithstanding any
failure of the Consultant to perform any Services under this Agreement or the
termination of this Agreement by the Company or the Consultant, with our without
cause, the Warrants shall automatically vest and be immediately exercisable by
the Consultant in three equal installments as follows: (i) Warrants to purchase
four million (4,000,000) shares of Common Stock upon the execution of this
Agreement, (ii) Warrants to purchase to purchase four million (4,000,000) shares
of Common Stock on the first anniversary of the date of this Agreement, and
(iii) Warrants to purchase to purchase four million (4,000,000) shares of Common
Stock on the second anniversary of the date of this Agreement. Notwithstanding
anything to the contrary set forth in this Agreement, the Consultant shall not
be entitled to exercise the Warrants and the Company shall have no obligation to
issue shares of Common Stock upon such exercise of all or any portion of the
Warrants to the extent that, following the exercise by the Consultant, the
Beneficial Ownership Number (as defined below) is equal to or greater than 4.99%
of the outstanding shares of Common Stock (including the shares to be issued to
the Consultant upon such exercise). Notwithstanding the foregoing, the preceding
sentence of this Section 2(c) shall have no further force and effect if there is
an outstanding tender offer by a third party for any or all of the shares of the
Company's Common Stock, or the Consultant, at its option, provides at least
sixty-five (65) days' advance written notice from the Consultant that the
preceding sentence of this Section 2(c) shall have no further force and effect.
For purposes of this Section, "Beneficial Ownership Number" shall equal the sum
of (i) the number of shares of Common Stock owned by the Consultant and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the Warrants or other
rights to purchase Common Stock or through the ownership of convertible
securities), and (ii) the number of shares of Common Stock issuable upon the
exercise of the Warrants.. For purposes of this Section, "beneficial ownership"
shall be defined in accordance with Rule 13(d)-3 of the Securities Exchange Act
of 1934, as amended. The Consultant, by its acceptance of the Warrants, further
agrees that if the Consultant transfers or assigns any of the Warrants to any
party, such assignment shall be made subject to the transferee's or assignee's
specific agreement to be bound by the provisions of this Section 2(c) as if such
transferee or assignee were the original holder hereof.
3. Registration Rights. The Shares shall be registered with the Securities and
Exchange Commission (the "SEC") on a Registration Statement on Form S-8 ("Form
S-8") under the Securities Act of 1933, as amended (the "Securities Act"), and
under all applicable state securities or blue sky laws immediately upon issuance
to the Consultant; and shall be accompanied by a written opinion of legal
counsel, acceptable in form and substance to Consultant's legal counsel, stating
that the Shares are duly authorized, fully-paid and non-assessable, shall be
issued in conformity with all applicable securities laws, and, upon issuance,
shall be freely tradable by Consultant without restriction. The Company
represents and warrants to the Consultant that it is in compliance with all
Securities Act requirements for use of Form S-8 and the Shares can be registered
with the SEC by a filing of a Form S-8 with the SEC prior to the issuance and
delivery of the Shares to the Consultant. Notwithstanding anything contained
herein to the contrary, each of the parties hereby acknowledge and agree that
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the Consultant's obligation to perform the Services is made subject to, and
conditioned upon: (i) the Consultant's receipt of the Company's most recent
annual report on Form 10-K and such other reports as filed under the Securities
Exchange Act of 1934, as amended, and otherwise required to be delivered to the
Consultant by the Company under Rule 428 promulgated by the SEC under the
Securities Act of 1933; (ii) the filing with the SEC of the Form S-8 and the
immediate effectiveness of the Form S-8 upon such filing; and (iii) delivery to
Consultant of stock certificates evidencing the Shares, without a restrictive
legend, subsequent to the effectiveness of the Registration Statement. In
addition, the Company covenants and agrees the register the Warrant Shares on
Form S-8, if such form is then available, upon written request by the Consultant
following the vesting of such Warrant Shares.
4. Consulting Period. This Consultant shall provide Services to the Company for
a period of three (3) years from the date hereof (the "Consulting Period");
provided, that, no termination of this Agreement by the Company or the
Consultant, as applicable shall affect the Consultant's right, title and
interest in and to the Shares and to and the Warrant Shares in any manner
whatsoever.
5. Independent Contractor. At all times during the term hereof, Consultant shall
be an independent contractor in providing the Services hereunder, with the sole
right to supervise, manage, operate, control and direct its performance incident
to such Consulting services. Nothing contained in this Agreement shall be deemed
or construed to create a partnership or joint venture, to create the
relationships of principal/agent or otherwise create any fiduciary duty or any
liability whatsoever of either party with respect to the indebtedness,
liabilities, obligations or actions of the other party or any of their employees
or agents, or any other person or entity. The Consultant has no right to legally
bind or obligate the Company or any other CKP Entity in any manner without the
prior written consent of the Company. Consultant shall be legally responsible
for its own employees and all employee matters in the performance of its
services hereunder.
6. Return of Property. Upon a termination of Consultant hereunder for any reason
whatsoever, Consultant shall promptly deliver to the Company all property
belonging to, or administered by, any CKP Entity, including, without limitation,
all materials relating to any Confidential Information (as defined below).
Consultant further agrees that it shall not make or retain any copy or extract
from such materials.
7. Protection of Confidential Information.
Consultant acknowledges that prior to the date hereof Consultant has had access
to, and during the course of Consultant 's retention hereunder will have access
to, significant Confidential Information (as hereinafter defined). Consultant
shall maintain all Confidential Information in strict confidence and shall not
disclose any Confidential Information to any other person, except as necessary
in connection with the performance of Consultant 's duties and obligations under
this Agreement. Consultant shall not use any Confidential Information for any
purpose whatsoever except in connection with the performance of Consultant 's
duties and obligations under this Agreement. The covenants set forth in this
Section 7 shall survive the termination of this Agreement.
"Confidential Information" shall mean any and all information pertaining to any
CKP Entity, its respective business, and its ownership or other activities with
respect to its securities, whether such information is in written form or
communicated orally, visually or otherwise, that is proprietary, non-public or
relates to any trade secret, including, but not limited to, materials relating
to any security or company, strategies for business plans, financial
information, ideas, concepts, techniques, models, data, documentation, research,
and "know-how." Notwithstanding the foregoing, "Confidential Information" shall
not include information that (i) is or becomes generally available to, or known
by, the public (either prior to or after the furnishings of such documents or
information) through no fault of Consultant; (ii) was known by Consultant prior
to its receipt thereof; (iii) becomes available to Consultant on a
non-confidential basis from any source (other than the disclosing person or its
representatives) that is not prohibited from disclosing such information by any
contractual, legal, or fiduciary obligation, or (iv) is independently acquired
or developed by Consultant without violating any of his obligations under this
Agreement.
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8. Specific Performance. (a)The Company acknowledges that any breach or
threatened breach of the covenants contained in Section 2 or Section 3 of this
Agreement will cause Consultant material and irreparable damage, the exact
amount of which will be difficult to ascertain, and that the remedies at law for
any such breach will be inadequate. Accordingly, the Company agrees that
Consultant shall, in addition to all other available rights and remedies
(including, but not limited to, seeking such damages as it can show it has
sustained by reason of such breach), be entitled to specific performance and
injunctive relief in respect of any breach or threatened breach of Section 2 or
Section 3 of this Agreement, without being required to post bond or other
security and without having to prove the inadequacy of the available remedies at
law.
(b) The Consultant acknowledges that any breach or threatened breach of the
covenants contained in Section 7 or Section 9 of this Agreement will cause the
Company material and irreparable damage, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such breach will be
inadequate. Accordingly, the Consultant agrees that Company shall, in addition
to all other available rights and remedies (including, but not limited to,
seeking such damages as it can show it has sustained by reason of such breach),
be entitled to specific performance and injunctive relief in respect of any
breach or threatened breach of Section 7 or Section 9 of this Agreement, without
being required to post bond or other security and without having to prove the
inadequacy of the available remedies at law.
9. Indemnification. (a) Each of Consultant and its directors, officers,
shareholders, employees, agents, representatives (and their respective estates
and personal representatives, if applicable), and all others acting on its
behalf (each a "Consultant Indemnified Party") shall be indemnified and held
harmless by the Company against any and all liabilities, settlements, judgments,
losses, damages, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively, "Loss") of whatever kind
and nature which may be asserted against a Consultant Indemnified Party in
connection with the performance of its duties under this Agreement, including,
without limitation, the performance of the Services hereunder which the
consultant reasonably believes to be in the best interest of the Company;
provided, however, that the Company shall have no obligation to indemnify and
hold Consultant harmless to the extent that any Loss is found by a court of
competent jurisdiction in a final judgment (no longer subject to appeal or
review) to have directly and primarily resulted from Consultant's willful
misconduct or gross negligence.
(b) Each of the Company and its directors, officers, shareholders, employees,
agents, representatives (and their respective estates and personal
representatives, if applicable), and all others acting on its behalf (each a
"Company Indemnified Party") shall be indemnified and held harmless by the
Consultant against any and all Loss of whatever kind and nature which may be
asserted against a Company Indemnified Party in connection with the performance
of its duties under this Agreement; provided, however, that Consultant shall
have no obligation to indemnify and hold the Company harmless to the extent that
any Loss is found by a court of competent jurisdiction in a final judgment (no
longer subject to appeal or review) to have directly and primarily resulted from
the Company's willful misconduct or gross negligence.
(c) The covenants of each party set forth in this Section 7 shall survive the
termination of this Agreement.
10. Assignment. This Agreement or any right or interest hereunder may not be
assigned by any party hereto, whether by operation of law or otherwise, without
the prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that, subject to compliance with the
federal securities laws, Consultant may transfer its Shares or Warrant Shares to
its members or to a trust for the benefit of a member or his or her immediate
family.. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their successors and permitted assigns.
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11. Notices. All notices, demands, consents, requests, instructions and other
communications to be given or delivered or permitted under or by reason of the
provisions of this agreement or in connection with the transactions contemplated
hereby shall be in writing and shall be deemed to be delivered and received by
the intended recipient as follows: (i) if personally delivered, on the business
day of such delivery (as evidenced by the receipt of the personal delivery
service), (ii) if mailed certified or registered mail return receipt requested,
five (5) business days after being mailed, (iii) if delivered by overnight
courier (with all charges having been prepaid), on the business day of such
delivery (as evidenced by the receipt of the overnight courier service of
recognized standing), or (iv) if delivered by facsimile transmission, on the
business day of such delivery if sent by 5:00 p.m. in the time zone of the
recipient, or if sent after that time, on the next succeeding business day (as
evidenced by the printed confirmation of delivery generated by the sending
party's telecopier machine). All such notices, demands, consents, requests,
instructions and other communications will be sent to the following addresses or
facsimile numbers as applicable:
(i) If to Consultant:
00 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxxx
X. Xxxxx, Managing Member
Fax No.:
(ii) If to CKP:
1414 Avenue of the Americas, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Fax No.:
or, in each case, at such other address as may from time to time be specified to
the other party in a notice similarly given.
12. Entire Agreement. This Agreement contains the entire understanding and
agreement of the parties relating to the subject matter hereof and supersedes
all prior and/or contemporaneous understandings and agreements of any kind and
nature (whether written or oral) between the parties with respect to such
subject matter, all of which are merged herein.
13. Severability. The parties agree that should any provision of this agreement
be held by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any jurisdiction, that holding shall be effective only to the
extent of such invalidity, illegally or unenforceability without invalidating or
rendering illegal or unenforceable the remaining provisions hereof, and any such
invalidity, illegally or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intent of the parties that this agreement be fully enforced to the
fullest extent permitted by applicable law.
14. Waiver; Amendment. Any waiver by a party hereto of any breach of or failure
to comply with any provision or condition of this Agreement by the other party
must be in writing and executed by the party granting such waiver. Any waiver
shall be limited to the specific matter and instance for which it is given. No
failure or delay by either party to enforce or exercise its rights hereunder
shall be deemed a waiver of such rights. This Agreement may not be modified,
amended, altered or supplemented, except by a written agreement executed by each
of the parties hereto.
15. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in that state, without regard to any of its
principles of conflicts of laws or other laws that would result in the
application of the laws of another jurisdiction. Each of the parties
unconditionally and irrevocably consents to the exclusive jurisdiction of the
courts of the State of New York and the federal district court for the Southern
District of New York with respect to any suit, action or proceeding arising out
of or relating to this Agreement, and each of the parties hereby unconditionally
and irrevocably waives any objection to venue in any such court or to assert
that any such court is an inconvenient forum, and agrees that service of any
summons, complaint, notice or other process relating to such suit, action or
other proceeding may be effected in the manner provided in the Notice section
hereof. Each of the parties hereby unconditionally and irrevocably waives the
right to a trial by jury in any such action, suit or other proceeding. Each of
the parties agrees that the court shall be entitled to award costs and expenses
(including, without limitation, attorneys' fees and expenses) to the prevailing
party in any suit, action or proceeding arising out of or relating to this
Agreement.
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16. Headings. The section headings contained in this Agreement are inserted for
reference purposes only and shall not affect in any way the meaning, cons
truction or interpretation of this Agreement. Any reference to the masculine,
feminine, or neuter gender shall be a reference to such other gender as is
appropriate. References to the singular shall include the plural and vice versa.
17. Drafting History. This Agreement shall be construed and interpreted without
regard to any presumption against the party causing this Agreement to be
drafted. The parties acknowledge that this Agreement was negotiated and drafted
with each party being represented by competent counsel of its choice and with
each party having an equal opportunity to participate in the drafting of the
provisions hereof and shall therefore be construed as if drafted jointly by the
parties.
18. Counterparts. This Agreement may be executed in two (2) or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, and all of which, when
taken together, shall constitute one and the same document. This Agreement shall
become effective when one or more counterparts, taken together, shall have been
executed and delivered by all of the parties.
[THE SIGNATUREPAGE IS ON THE FOLLOWING PAGE]
The parties hereto have duly executed and delivered this agreement as of the
date first written above.
XXXXXX XXXXXXX PROMOTIONS, INC.
By:
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Name:
Title:
PHILABELLE CONSULTING, LLC
By:
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Name:
Title:
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