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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of June
17, 1999 by and between Virtual Technology Corporation ("VTC"), a Minnesota
corporation and Sports Marketing, Inc. ("Consultant"), a Florida corporation.
RECITALS
A. VTC is a public company whose Common Stock, no par value, is quoted
on the OTC Bulletin Board. VTC is in the business of selling computers and
computer-related equipment on the Internet.
B. Consultant is experienced in evaluating and developing strategic
business relationships with sports marketing entities.
C. VTC wishes to engage the Consultant on a nonexclusive basis as an
independent contractor to utilize Consultant's services to further develop its
affiliations with sports associations, figures and organizations.
AGREEMENT
NOW, THEREFORE, it is mutually agreed by and between the Parties as
follows:
1. ENGAGEMENT. VTC hereby retains and engages Consultant to evaluate
and assist in the development of VTC's strategic business plan and as described
in more detail in paragraph 2 below (the "Consulting Services"), and Consultant
agrees to perform the Consulting Services subject to the terms and conditions of
this Agreement.
2. CONSULTING SERVICES. The consulting services contemplated by this
Agreement (the "Consulting Services") shall consist of:
a. Reviewing and evaluating VTC's current sports affiliations
and remaining knowledgeable about the contents thereof;
b. Working with VTC's management to develop and prepare a
detailed strategic business plan; and
c. Working with VTC's management to periodically revise the
VTC strategic business plan as required during the term of this Agreement.
d. Provide introductions to sports figures, associations and
organizations and related industry contacts.
3. DUTIES EXPRESSLY EXCLUDED. This Agreement expressly excludes the
Consultant from providing any and all capital formation and/or public relations
services to the Company inclusive of,
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but not limited to (i) direct or indirect promotion of the Company's securities;
(ii) assistance in making of a market in the Company's securities; and (iii)
assistance in obtaining debt and/or equity financing.
4. CONSIDERATION. In consideration of the performance by Consultant of
the Consulting Services, VTC will issue to Xx. Xxxxxx Xxxxxxxx (the designated
employee of Consultant) 250,000 shares of VTC's Common Stock (the "Shares")
valued at $3.00 per share based upon the market price on the date of this
Agreement. In the event that Consultant does not completely perform the
Consulting Services (for any reason including the death or incapacity of
Consultant), then for each month that Consultant does not perform the Consulting
Services, one sixth (1/6) of the Shares (as adjusted for stock splits, reverse
stock splits, stock dividends or distributions or other reclassifications of
VTC's common stock) shall be returned to VTC and canceled. Consultant agrees to
purchase shares in the open market, if necessary, to fulfill such obligation to
return shares to VTC with a three (3) month minimum fee paid to Consultant no
matter what happens.
The shares will be issued as soon as practicable following execution of
this Agreement and the filing of a registration statement under the Securities
Act of 1933, as amended, on Form S-8 covering the Shares.
5. EXPENSES. Consultant shall bear his out-of-pocket costs and expenses
incident to performing the Consulting Services, without a right of reimbursement
by VTC.
6. TERM. The term of this Agreement is six (6) months, commencing June
17, 1999 and ending December 17, 1999 (the "Term"). This Agreement may be
terminated prior to the end of the Term upon the mutual written agreement of the
Parties or in the event Consultant is in default (as defined below) in the
performance of the Consulting Services, which default is not cured within a
reasonable time following written notice thereof from VTC. A "default" occurs
when, in VTC's sole and exclusive judgment, Consultant is not satisfactorily
performing the Consulting Services.
7. CONSULTANT'S LIABILITY. In the absence of gross negligence or
willful misconduct on the part of the Consultant or the Consultant's breach of
any term of this Agreement, the Consultant shall not be liable to the Company or
to any officer, director, employee, shareholder or creditor of the Company, for
any act or omission in the course of or in connection with the rendering or
providing of services hereunder. Except in those cases where gross negligence or
willful misconduct of the Consultant or the breach by the Consultant of any
terms of this Agreement is alleged and proven, the Company agrees to defend,
indemnify, and hold the Consultant harmless from and against any and all
reasonable costs, expenses and liability (including reasonable attorney's fees
paid in the defense of the Consultant) which may in any way result from services
rendered by the Consultant pursuant to or in connection with this Agreement.
This indemnification expressly excludes any and all damages as a result of any
actions or statements, on behalf of the Company, made by the Consultant without
the prior approval or authorization of the Company.
8. COMPANY'S LIABILITY. The Consultant agrees to defend, indemnify, and
hold the Company harmless from and against any and all reasonable costs,
expenses and liability (including reasonable attorney's fees paid in defense of
the Company) which may in any way result pursuant to its gross negligence or
willful misconduct or in any connection with any actions taken or statements
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made, on behalf of the Company, without the prior approval or authorization of
the Company or which are otherwise in violation of applicable law.
9. CONSULTANT'S REPRESENTATIONS. The Consultant makes the following
representations:
(a) Consultant has no prior or existing legally binding obligations
that are in conflict with its entering into this Agreement;
(b) Consultant shall not offer or make payment of any consideration
to brokers, dealers, or others for purposes of inducing the purchase, making of
a market or recommendation for the purchase of the Company's securities;
(c) Consultant is not currently the subject of an investigation or
inquiry by the Securities and Exchange Commission, the NASD, or any state
securities commission;
(d) Consultant's activities and operations fully comply with now and
will comply with in the future all applicable state and federal securities laws
and regulations;
(e) Consultant is either properly registered as, or exempt from
registration, as a broker-dealer or an investment advisor;
(f) Consultant understands that, as a result of its services, it may
come to possess material non-public information about the Company, and that it
has implemented internal control procedures designed to reasonably insure that
none of its employees, agents, consultants or affiliates, trade in the
securities of client companies while in possession of material non-public
information;
(g) During the Term of this Agreement and for a period of two years
thereafter, the Consultant shall treat as the Company's confidential trade
secrets all data, information, ideas, knowledge and papers pertaining to the
affairs of the Company. Without limiting the generality of the foregoing such
trade secrets shall include: the identity of the Company's customers, suppliers
and prospective customers and suppliers; the identity of the Company's creditors
and other sources of financing, the Company's estimating and costing procedure
and the cost and gross prices charged by the Company for its products; the
prices or other consideration charged to or required of the Company by any of
the suppliers or potential suppliers; the Company's sales and promotional
policies; and all information relating to entertainment programs or properties
being produced or otherwise developed by the Company. The Consultant shall not
reveal said trade secrets to others except in the proper exercise of its duties
for the Company, or use their knowledge thereof in any way that would be
detrimental to the interest of the Company unless compelled to disclose such
information by judicial or administrative process; provided, however, that the
divulging of information shall not be a breach of this Agreement to the extent
that such information was (i) previously known by the party to which it is
divulged, (ii) already in the public domain, all through no fault of the
Consultant, or (iii) required to be disclosed by Consultant pursuant to judicial
or governmental order. The Consultant shall also treat all information
pertaining to the affairs of the Company's suppliers and customers and
prospective customers and suppliers as confidential trade secrets of such
customers and suppliers and prospective customers and suppliers; and
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(h) Consultant agrees to notify the Company immediately if, at any
time, any of the representations and warranties made by the Consultant herein
are no longer true and correct or if a breach of any of the representations and
warranties made by the Consultant herein occurs.
10. COMPANY REPRESENTATIONS. The Company makes the following
representations:
(a) The Company is in good standing in the state of
incorporation, Minnesota.
(b) The Company and its senior management are not aware of any
materially adverse events not previously disclosed in the Company's annual and
quarterly reports with the Securities and Exchange Commission.
11. ENTIRETY OF AGREEMENT. This Agreement sets forth the entire
understanding of the Parties with respect to the matters contemplated hereby.
Any and all previous agreements and understandings between or among the Parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement. This Agreement shall not be amended or modified except by
written instrument duly executed by each of the Parties.
12. ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned
without the prior written consent of the other Party.
13. WAIVER. Any term or provision of this Agreement may be waived at
any time by the Party entitled to the benefit thereof by a written instrument
duly executed by such Party.
14. NOTICES. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by facsimile, or
by registered or certified mail, postage prepaid, as follows:
If to VTC to:
Virtual Technology Corporation
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Consultant, to:
Sports Marketing, Inc.
Attn: Xx. Xxxxxx Xxxxxxxx
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxx Xxxxx, XX 00000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communications will be deemed to have been given as
of the date so delivered, telephoned or mailed.
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15. GOVERNING LAW. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Minnesota.
16. NO BENEFIT TO OTHERS. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
Parties hereto.
17. SEVERABILITY. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability in such jurisdiction without invalidating or
rendering unenforceable the remaining provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. HEADINGS. The headings of this Agreement are inserted solely for
the convenience of reference and are not part of, and are not intended to
govern, limit or aid in the construction of any term or provision hereof.
19. FURTHER ACTS. Each party agrees to perform any further acts and
execute and deliver any further documents that may be reasonably necessary to
carry out the provisions and intent of this Agreement.
20. ACKNOWLEDGMENT CONCERNING COUNSEL. Each party acknowledges that it
had the opportunity to employ separate and independent counsel of its own
choosing in connection with this Agreement.
21. INDEPENDENT CONTRACTOR STATUS. There is no relationship,
partnership, agency, employment, franchise or joint venture between the parties.
The parties have no authority to bind the other or incur any obligations on
their behalf.
22. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first above written.
VIRTUAL TECHNOLOGY CORPORATION
a Minnesota corporation
By:
/s/ Xxxxxxx Israel
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Name: Xxxxxxx Israel, Chairman
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SPORTS MARKETING, INC.
By:
/s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx, Authorized
Officer
