MANAGEMENT SERVICES AGREEMENT
THIS
MANAGEMENT SERVICES AGREEMENT is dated July 1, 2007 (the “Effective
Date”) by and between UNIVERSAL CAPITAL MANAGEMENT, INC., a
Delaware corporation (“Manager”), and THEATER XTREME
ENTERTAINMENT GROUP, INC., a Florida corporation (“TXEG”).
BACKGROUND
TXEG
desires to obtain from the Manager, and the Manager is willing and able to
provide to TXEG, certain 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. Engagement
of Manager
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) Significant
Managerial Assistance: Manager shall provide TXEG with managerial
assistance on issues such as employment, payroll, and benefits; real estate
leasing; utility utilization; capital expenditures; personnel; and other related
matters.
(iii) Investment
Banking Consultation Services: Manager will assist TXEG in
seeking funding. Manager will provide TXEG with various options and methods
for
attaining its investment banking and public market goals.
(iv) 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.
(b) To
the extent that Manager is able in the ordinary course of business, Manager
shall provide or cause to be provided, 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 or divisions except where Manager’s
extraordinary business needs require otherwise and provided TXEG is notified
in
advance of any delay and the Services are provided to TXEG at the next available
opportunity.
(c) 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 date first set forth above and, subject
to the provisions of section (b) of this Section 3, shall terminate on June
30,
2008 (the “Term”).
(b) (b)
Notwithstanding the provisions of subsection (a) of this Section 3, (i) Manager
can terminate this Agreement at any time upon thirty (30) days’ prior written
notice to TXEG upon TXEG’s failure to pay the amounts required hereunder and
TXEG’s failure to correct such failure during such time period and (ii) TXEG can
terminate this Agreement after thirty (30) days’ prior written notice to Manager
of Manager’s failure to fulfill its obligations hereunder and Manager’s failure
to correct such failure during such time period.
4. Compensation
(a) TXEG
shall pay Manager for the Services by delivering to Manager Six Hundred Fifty
Thousand (650,000) 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, and
(b) a
warrant
to purchase up to Five Hundred Thousand (500,000) shares of the common stock,
par value $0.001, of TXEG at an exercise price of $1.00. The Warrant will be
exercisable in whole or in part at or before 5:00 p.m. E.S.T. on July 1,
2012.
(c) In
addition, TXEG shall reimburse Manager for third party and out-of-pocket
expenses actually and reasonably incurred by Manager in performing the Services;
provided that expenses of Affiliates of Manager shall not be deemed third party
expenses for purposes of this Section 4, and provided, further that Manager
or
its Affiliates obtain the prior written consent of TXEG for any costs in excess
of $5,000 and provide adequate documentation of all expenses.
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. Manager represents that it does
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not
currently represent any other company offering competitive home theater sales
and installation services and will provide TXEG with ninety (90) days prior
written notice before agreeing to act as an adviser to any such
companies.
6. Delegation
and Assignment With the prior written consent of TXEG,
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 delegee 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
(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.
(b) No
party
shall be under any obligation 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.
(c) The
confidentiality obligations of this Section 6 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
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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
(d) 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.
(e) 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 the right to terminate this Agreement with respect to the
disrupted Services immediately upon written notice to Manager. An
event of Force Majeure shall not operate to extend the Term or to 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 any damages, including, but
not limited to, special, incidental or consequential damages, suffered
by TXEG beyond a refund to TXEG of all charges paid by TXEG to
Manager for the Services that caused such damages, unless Manager shall have
been guilty of gross negligence or willful misconduct. The provisions
of this Section 10 shall survive termination of this Agreement.
11. Indemnification TXEG
shall and hereby agrees to indemnify and hold harmless the Manager and each
of
its officers, directors, and employees from and against any and all claims
of
any third parties brought against Manager and all Damages and Expenses incurred
by Manager each and all solely with respect to matters arising solely out of
this Management Services Agreement, except such claims or Damages and Expenses,
as the case may be, as shall conclusively be shown to have resulted from
Manager’s gross negligence or willful misconduct. The
provisions of this Section 10 shall survive the termination of this
Agreement.
12. Manager’s
Investment Representations Manager hereby represents and
warrants to and with TXEG that:
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(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, 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.
(f) Manager
understands that at this time
there is no public market for the Shares and that there may not, in the future
be any market for the Shares. Manager also understands that any disposition
of
the Shares may result in unfavorable tax consequences to Manager.
(g) Manager
is aware and acknowledges that,
because of the substantial restrictions on the transferability of the Shares,
it
may not be possible for Manager to liquidate its investment in TXEG readily,
even in the case of an emergency.
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13. Definitions
(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.
14. 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
6
occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
(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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|
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Universal
Capital Management, Inc.
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||
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0000
Xxxxxx Xxxxx
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||
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Xxxxx
00
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||
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Xxxxxxxxxx,
XX 00000
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||
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Attention:
Xxxxxxx X. Xxxxx
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||
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If
to:
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TXEG
|
|
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Xxxxx
Xxxxx, President and CEO
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000
Xxxxxxxxx Xxxx., Xxxxxx X & X
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Xxxxxx,
XX 00000
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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
7
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.
(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 as of the day and year first above written.
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By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title: Chairman
and CEO
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UNIVERSAL
CAPITAL MANAGEMENT, INC.
By:
/s/ Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title: President
and CEO
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