CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of June
29, 2001, by and between Xxxxx Xxxxxx Entertainment Corporation, a California
corporation (the "Company"), and Xxxxx Xxxxxx, a California resident
("Consultant").
Recitals
A. The Company is engaged in the business of creating, producing and
distributing syndicated radio programs and services and affiliating radio
stations and providing related products and services in connection therewith
(the "Company Business").
B. Concurrently with the execution and delivery of this Agreement, NBG
Radio Network, Inc., a Nevada corporation ("Buyer"), is purchasing from
Consultant all of the issued shares of stock of the Company, pursuant to a Stock
Purchase Agreement dated October 6, 2000, as amended by the First Amendment to
Stock Purchase Agreement dated October 25, 2000, Letter Agreement executed
February 14, 2001, Letter Agreement executed March 20, 2001, the Second
Amendment to Stock Purchase Agreement dated March 30, 2001, the Third Amendment
to Stock Purchase Agreement dated May 23, 2001, the Fourth Amendment to the
Stock Purchase Agreement dated June 15, 2001, the Fifth Amendment to the Stock
Purchase Agreement dated June 22, 2001, and the Sixth Amendment to the Stock
Purchase Agreement dated June 29, 2001 (the "Purchase Agreement"), by and among
Buyer, the Company and Consultant. The execution and delivery of this Agreement
is a condition precedent to the performance of Buyer's obligations under the
Purchase Agreement.
C. Buyer and the Company desire to engage Consultant as an independent
contractor for the Company, and Consultant wishes to accept such engagement,
upon the terms and conditions set forth in this Agreement.
Accordingly, the parties agree as follows:
Agreement
1. Engagement.
1.1 Term. The Company agrees to engage Consultant for a term commencing
as of the date of this Agreement and continuing until the third anniversary of
the date of this Agreement, unless earlier terminated in accordance with Section
4.
1.2 Services. Consultant agrees to provide the Company with consulting
services, which shall generally consist of creating, producing, and distributing
syndicated radio programs and services and affiliating radio stations on behalf
of the Company and its affiliates on an exclusive basis as an independent
contractor, provided, that Consultant may participate, either directly or
indirectly, in a business that does not compete with the Buyer's or the
Company's business. With Consultant's consent, Consultant shall perform such
specific services and shall exercise such specific authority as may be assigned
to Consultant from time to time by the executive officers of the Company.
1.3 Time and Place of Performance. Consultant shall provide 44 weeks of
service on a calendar basis, of which 40 weeks of Consultant's services shall be
performed in Santa Cruz, California and 4 weeks of Seller's services shall be
performed in such other places to be determined in the sole discretion of
Consultant. During such periods, Consultant shall be available to devote no
fewer than seven hours per day to the performance of his services under this
Agreement.
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1.4 Status of Consultant. Consultant shall act as an independent
contractor, and not as an employee of the Company. The Company shall not
exercise direction or control over Consultant in the performance of Consultant's
services under this Agreement. Subject to the terms of this Agreement,
Consultant shall determine the method, details, personnel and means of
performing the Consultant's services under this Agreement. Consultant shall be
responsible for the withholding and payment of any and all federal, state, local
or other tax payable in respect of this Agreement. The Company shall provide no
insurance covering Consultant or Consultant's activities, and Consultant shall
provide whatever insurance Consultant believes to be necessary under the
circumstances.
1.5 No Conflict. Consultant represents and warrants that the execution
and delivery by Consultant of this Agreement (and the performance of
Consultant's obligations under this Agreement) do not and will not (a) conflict
with or result in a breach of the terms, conditions or provisions of, (b)
constitute a default under, (c) result in a violation of, or (d) require any
authorization, consent, approval, exemption, or other action by or notice to any
court or administrative or governmental body pursuant to any law, statute, rule,
or regulation to which Consultant is subject or any agreement, document,
instrument, order, judgment, or decree to which Consultant is subject.
2. Consulting Fees.
2.1 Consulting Fee. In consideration of all services to be rendered by
Consultant to the Company, the Company shall pay to Consultant a consulting fee
of $200,000 per year, payable in equal monthly installments of $16,667.67 due on
the first day of each month. If said payment is not received within 5 business
days thereafter, Consultant shall be entitled to terminate this Agreement if
Company fails to make the required payment within 5 business days of written
demand by Consultant.
2.2 Expenses. Consultant shall be entitled to reimbursement from the
Company for reasonable expenses necessarily incurred by Consultant in the
performance of Consultant's services under this Agreement, on presentation of
vouchers indicating in reasonable detail the amount and business purpose of each
such expense and on compliance with the other requirements of the Company's
expense reimbursement policy.
3. Noncompetition; Confidentiality; Inventions.
3.1 Noncompetition and Nonsolicitation. To the fullest extent allowed
by applicable law, for the period commencing on the date of this Agreement and
ending on the date of termination of this Agreement, Consultant covenants and
agrees as follows:
3.1.1 Consultant shall not directly or indirectly engage,
within the United States of America, Canada or Mexico, in the Company Business
or in any other business that competes with a business conducted by the Company
or Buyer. For purposes of this section, Consultant shall be deemed to be
indirectly engaged in a business if Consultant owns an interest in or
participates in the management, operation, or control (except as a shareholder
of publicly traded common stock) of any sole proprietorship, partnership,
limited liability company, corporation, trust, association, or other form of
entity or association (individually, an "Enterprise") that is engaged in a
business covered by this section.
3.1.2 Consultant shall not directly or indirectly, for the
benefit of Consultant or any other person or Enterprise, (a) solicit any
business whatsoever from any customer, supplier, vendor or contractor of the
Company or Buyer, (b) induce or cause any customer to cease purchasing any
service or product from the Company or Buyer or to terminate or change such
customer's business relationship with the Company or Buyer in any manner, or (c)
induce or cause any supplier, vendor or contractor to cease
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providing or selling any service or product to the Company or Buyer or to
terminate or change such supplier's business relationship with the Company or
Buyer in any manner. The foregoing customers, suppliers, vendors and contractors
shall include all prospective customers, suppliers, vendors and contractors with
whom Consultant, the Company or Buyer solicited business or entered into a
business relationship within the 24 months immediately preceding the date of the
Purchase Agreement.
3.1.3 Consultant shall not directly or indirectly, for the
benefit of Consultant or any other person or Enterprise, (a) induce or solicit
any person who is then employed by the Company or Buyer or has been employed by
the Company or Buyer at any time during the one-year period preceding such
inducement or solicitation, to leave his or her employment or other position
with the Company or Buyer or to accept any other employment or position or (b)
otherwise assist any person or Enterprise in hiring or otherwise engaging such
person.
3.2 Confidentiality. Consultant agrees that all Confidential
Information (as defined below) is (a) the sole and exclusive property of the
Company or Buyer, (b) considered trade secrets of the Company or Buyer, and (c)
entitled to all protections provided by applicable law to trade secrets. Except
with the prior written consent of the Company or Buyer, Consultant agrees during
the term and after the termination of this Agreement to (1) hold the
Confidential Information in the strictest confidence, (2) not disclose the
Confidential Information to any person or Enterprise (except to other employees
or consultants of the Company or Buyer on a "need-to-know" basis to the extent
necessary for them to perform the duties of their employment or engagement with
the Company), and (3) exercise the highest degree of care in safeguarding
Confidential Information against loss, theft, or other inadvertent disclosure.
During the term and after the termination of this Agreement, Consultant agrees
not to use the Confidential Information in any manner except in connection with
the performance of his services under this Agreement or except with the prior
written consent of the Company or Buyer.
As used in this Agreement "Confidential Information" means information
disclosed to or acquired by the Consultant during the course of performing his
duties set forth in this Agreement that is (a) proprietary information of
Company or Buyer; (b) information marked or designated by Company or Buyer as
confidential information and acknowledged by the Consultant as such; (c)
information reasonably designated as confidential information which is known to
Consultant as confidential, and, where reasonable, reduced by the Company to
writing; or (d) information provided to Company by third parties which Company
or Buyer is obligated to keep confidential. Confidential Information includes,
but is not limited to: (1) business plans or strategies which are in effect or
which have been formulated prior to the termination of this Agreement; (2)
programs developed or in the process of being developed regardless of whether
such programs have entered production during the term of this Agreement; (3)
terms of any contracts or the proposed terms and status of any contract being
negotiated; (4) nonpublic financial information including margins, budgets,
forecasts, and projections; and (5) marketing plans developed or in the process
of being developed prior to the termination of this Agreement. The Confidential
Information shall include information in any form in which such information
exists, whether oral, written, film, tape, computer disk, or other form of
media. Confidential Information will not include (i) any information that is
available in the public domain other than as a result of acts by Consultant in
breach of this Agreement, (ii) any information which Consultant develops
independently or had knowledge of prior to his engagement as a consultant under
this Agreement, (iii) any information that Consultant is required to disclose by
law or court order, or (iv) any information that the Company or Buyer would
disclose in the ordinary course of its business.
3.3 Inventions. Consultant agrees that all Inventions (as defined
below) are works made-for-hire and shall be the sole property of the Company.
Consultant will promptly and without request by the Company fully disclose to
the Company in writing any Invention. Consultant will assign (and by this
Agreement, hereby assigns) to the Company all of Consultant's rights to such
Inventions, and to
3 - CONSULTING AGREEMENT
applications for patents, trademarks, or copyrights in all countries and to
patents, trademarks, and copyrights granted in all countries. Upon the request
of the Company, at its expense, Consultant will apply for such United States or
foreign patents or copyrights as the Company may deem desirable, and Consultant
will do any and all acts necessary in connection with such applications for
patents or copyrights, or assignments, in order to establish in the Company the
entire right, title and interest in and to such patents or copyrights. If
Consultant renders assistance to the Company under this section after
termination of this Agreement, the Company shall pay a reasonable fee as
determined by the Company for Consultant's time and expenses.
As used in this Agreement, the term "Inventions" means discoveries,
improvements and ideas (whether or not in writing or reduced to practice) and
works of authorship, whether or not patentable, trademarkable, or copyrightable
that occur during the Consultants performance of his duties under this
Agreement. Inventions will not include any discoveries, improvements, or ideas
that Consultant develops after the expiration of this Agreement.
3.4 Return of Documents. Consultant agrees that all originals and
copies of records, data, reports, documents, lists, plans, drawings,
correspondence, memoranda, notes, and other materials related to or containing
any Confidential Information or Inventions, in whatever form they exist, whether
written, film, tape, computer disk, or other form of media, if in his possession
or under his control at the expiration of this Agreement, shall be the sole and
exclusive property of the Company or Buyer and shall be returned promptly to the
Company or Buyer upon the termination of this Agreement or on the written
request of the Company or Buyer.
3.5 Reasonableness of Restrictions. Consultant acknowledges that the
covenants set forth in this Agreement (a) do not impose unreasonable
restrictions or work a hardship on Consultant, (b) are essential to the
willingness of the Company to engage Consultant, (c) are necessary and
fundamental to the protection of the business conducted by the Company and
Buyer, and (d) are reasonable as to scope, duration, and territory.
3.6 Injunction. Consultant agrees that it may be difficult to measure
damage to the Company and Buyer from any breach by Consultant of Section 3 and
that monetary damages may be an inadequate remedy for any such breach.
Accordingly, Consultant agrees that if Consultant shall breach or take steps
preliminary to breaching any provision of Section 3, the Company or Buyer shall
be entitled, in addition to all other remedies it or they may have at law or in
equity, to a restraining order, temporary and permanent injunctive relief,
specific performance, or other appropriate equitable relief, without showing or
proving that any actual damage has been sustained by the Company or Buyer.
3.7 No Release. Consultant agrees that the termination of this
Agreement will not release Consultant from any obligations under Sections 3.2,
3.3, 3.4, 3.5, and 3.6.
4. Termination.
4.1 Causes or Grounds for Termination of Agreement. This Agreement may
be terminated as follows:
4.1.1 The Company may terminate this Agreement for any reason
and without cause by giving 90 days' prior written notice to Consultant;
provided, however, that the Company may pay to Consultant 90 days of the
consulting fee in lieu of giving such notice.
4.1.2 The Company shall have the right to terminate this
Agreement at any time, without notice and without payment of any consulting fees
in lieu of notice, if Consultant has suffered a
4 - CONSULTING AGREEMENT
disability as a result of illness, accident, or other cause and is unable to
perform a substantial portion of Consultant's obligations under this Agreement
for a total (consecutive or cumulative) of 60 days in any 12-month period after
the date the disability commenced.
4.1.3 Consultant shall have the right to terminate this
Agreement for any material breach of the Company's obligations under this
Agreement if such breach is not cured within 5 business days' notice of it from
Consultant to the Company (except as otherwise provided in Section 2.1).
4.1.4 This Agreement shall terminate automatically on
Consultant's death.
4.2 Effect of Termination. Upon the termination of this Agreement,
Consultant (or Consultant's estate in the event of Consultants' death) shall
receive Consultant's consulting fees prorated through the effective date of
termination of this Agreement. Additionally, upon the termination of this
Agreement, for any reason whatsoever, Consultant shall be released from his
obligations as set forth in Section 3.1 and as further provided for Section 7.
4.3 Right of First Refusal. Upon the termination of this Agreement for
any reason, for the period commencing on the date of termination and ending on
the third anniversary of the date of this Agreement, Consultant will provide the
Company with prompt notice of any syndication, employment, hosting or similar
agreement (each such, a "Syndication Agreement") pursuant to which Consultant
agrees to provide services related to the creation, production, affiliation,
syndication or distribution of radio programs and services to a third party.
During such period, if Consultant enters into with or receives from a third
party a firm, bona fide offer or commitment pursuant to which the third party
will provide sales representation services, including resale or assignment of
advertising inventory, in connection with or in any way related to any such
Syndication Agreement, Consultant will provide the Company with prompt notice of
the terms and conditions of the offer or commitment and the identity of the
prospective third party (each, an "Offer Notice"). For a period of 30 days
following the Company's receipt of an Offer Notice, the Company and/or the Buyer
will have the right to enter into a sales representation agreement or similar
agreement with Consultant on substantially the same terms and conditions set
forth in the Offer Notice. If the Company and/or the Buyer exercises its rights
under this Section, Consultant and the Company and/or the Buyer will promptly
enter into a sales representation agreement or similar agreement, which will
include substantially the same terms and conditions set forth in the Offer
Notice and any additional or supplemental terms and conditions consistent with
past practices between Consultant and the Company and/or the Buyer. If the
Company and/or the Buyer fails to exercise its rights under this Section,
Consultant may enter into with the party identified in the Offer Notice a sales
representation agreement or similar agreement, the terms and conditions of which
shall not vary substantially from those set forth in the Offer Notice. This
Section 4.3 and Section 6 shall survive termination of this Agreement. For
purposes of this Section, the term "Consultant" will include any entity owned or
controlled by Consultant.
5. Indemnification.
5.1 Consultant will indemnify and hold harmless Buyer, the Company, and
their respective past, present and future affiliates, controlling persons,
officers, directors, shareholders, employees, agents, representatives and their
successors and assigns (collectively, the "Buyer Indemnified Persons") for, and
will pay to the Buyer Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim, arising,
directly or indirectly, from or in connection with any breach by Consultant of
any covenant or obligation of Consultant in this Agreement.
5 - CONSULTING AGREEMENT
5.2 The Company will indemnify and hold harmless Consultant and his
successors and assigns (collectively, the "Consultant Indemnified Persons") for,
and will pay to the Consultant Indemnified Persons the amount of, any loss,
liability, claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third-party claim,
arising, directly or indirectly, from or in connection with any breach by the
Company of any covenant or obligation of the Company in this Agreement.
5.3 The remedies provided in this Section 5 will not be exclusive of or
limit any other remedies that may be available to the Buyer Indemnified Person
or the Consultant Indemnified Persons. The parties agree that the termination of
this Agreement shall not release the parties from any obligations under this
Section 5.
6. Miscellaneous.
6.1 Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
6.2 Assignment. Neither this Agreement nor any of the rights,
interests, or obligations under this Agreement shall be assigned by any party
without the prior written consent of the other parties; provided, however, the
Company may assign this Agreement and any of its rights, interests, or
obligations under this Agreement to any affiliate of the Company without the
consent of Consultant upon five days' notice.
6.3 No Third-Party Beneficiaries. Except as expressly provided in this
Agreement, nothing in this Agreement, express or implied, is intended or shall
be construed to confer on any person, other than the parties to this Agreement,
any right, remedy, or claim under or with respect to this Agreement.
6.4 Notices. All notices and other communications under this Agreement
must be in writing and shall be deemed to have been given if delivered
personally, sent by facsimile (with confirmation), mailed by certified mail, or
delivered by an overnight delivery service (with confirmation) to the parties to
the following addresses or facsimile numbers (or at such other address or
facsimile number as a party may designate by like notice to the other parties):
If to the Company: Xxxxx Xxxxxx Entertainment Corporation
c/o NBG Radio Network, Inc.
The Cascade Building
000 XX Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: XX Xxxxxxxxx
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With a copy to: Xxxxxxx Xxxxxxxxxx & Xxxxx, P.C.
0000 XX Xxxxx Xxxxxx
Xxxxx 0000, Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
If to Consultant: Xxxxx Xxxxxx
000X Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to: Xxxx X. Xxx Xxxxx III
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Any notice or other communication shall be deemed to be given (a) on
the date of personal delivery, (b) at the expiration of the third day after the
date of deposit in the United States mail, or (c) on the date of confirmed
delivery by facsimile or overnight delivery service.
6.5 Amendments. This Agreement may be amended only by an instrument in
writing executed by all the parties.
6.6 Construction. The captions used in this Agreement are provided for
convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement. All references in this Agreement to "Section" or
"Sections" without additional identification refer to the Section or Sections of
this Agreement. All words used in this Agreement shall be construed to be of
such gender or number as the circumstances require. Whenever the words "include"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." References to any person shall include the
successors and assigns of such person.
6.7 Counterparts. This Agreement may be executed in counterparts, each
of which will be considered an original and all of which together will
constitute one and the same agreement.
6.8 Facsimile Signatures. Facsimile transmission of any signed original
document will be the same as deliver of an original. As the request of a party,
the non-requesting party will confirm facsimile transmitted signatures by
signing an original document.
6.9 Further Assurances. Each party agrees (a) to execute and deliver
such other documents and (b) to do and perform such other acts and things, as
any other party may reasonably request, in order to carry out the intent and
accomplish the purposes of this Agreement.
6.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to
conflict-of-laws principles.
6.11 Attorney Fees. If any arbitration, suit, or action (including any
proceeding brought under the United States Bankruptcy Code) is instituted to
interpret or enforce the provisions of this Agreement, to rescind this
Agreement, or otherwise with respect to the subject matter of this Agreement,
the party prevailing on an issue shall be entitled to recover with respect to
such issue, in addition to costs, reasonable attorney fees and other legal
expenses incurred in preparation or in prosecution or defense of
7 - CONSULTING AGREEMENT
such arbitration, suit, or action as determined by the arbitrator or trial
court, and if any appeal is taken from such decision, reasonable attorney fees
as determined on appeal.
6.12 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any respect for any reason, the validity and enforceability
of any such provision in any other respect and of the remaining provisions of
this Agreement shall not be in any way impaired.
6.13 Entire Agreement. This Agreement (including the Purchase Agreement
and any other agreements, documents and instruments referred to in this
Agreement) constitutes the entire agreement and understanding of the parties
with respect to the subject matter of this Agreement and supersedes all prior
understandings and agreements, whether written or oral, among the parties with
respect to such subject matter.
6.14 Arbitration. Except for Section 3, any controversy or claim
arising out of or relating to this Agreement, including, without limitation, the
making, performance, or interpretation of this Agreement, shall be settled by
arbitration. Unless otherwise agreed, the arbitration shall be conducted in
Portland, Oregon and administered by the Arbitration Service of Portland in
accordance with its then-current commercial arbitration rules. Unless otherwise
agreed, the arbitration shall be held before a single arbitrator. The arbitrator
shall be chosen from a panel of attorneys knowledgeable in the field of business
law. If the arbitration is commenced, the parties agree to permit discovery
proceedings of the type provided by the Federal Rules of Civil Procedure both in
advance of, and during recesses of, the arbitration hearings. The parties agree
that the arbitrator shall have no jurisdiction to consider evidence with respect
to or render an award or judgment for punitive damages (or any other amount
awarded for the purpose of imposing a penalty). The parties agree that all facts
and other information relating to any arbitration arising under this Agreement
shall be kept confidential to the fullest extent permitted by law. Any party may
apply to any court of competent jurisdiction for a judgment or decree enforcing
the arbitral award. The parties will advance jointly the arbitrators' fees and
costs of arbitration. The arbitrators shall award fees as specified in Section
6.11 and may, in the arbitrators' discretion, award the prevailing party
reimbursement for its share of the arbitral fees and costs advanced. Any party
may, without inconsistency with this Agreement, seek from a court any interim or
provisional relief that may be necessary to protect the rights or property of
that party pending the selection of the arbitrators (or pending the arbitrators'
determination of the merits of the controversy or claim).
6.15 Waiver. Any provision or condition of this Agreement may be waived
at any time, in writing, by the party entitled to the benefit of such provision
or condition. Waiver of any breach of any provision shall not be a waiver of any
succeeding breach of the provision or a waiver of the provision itself or any
other provision.
7. Post Termination of Agreement.
The parties acknowledge and agree that after the termination of this
Agreement, either by it expiring according to its three year term, or prior
thereto, in accordance with the provisions of Sections 4.1.1, 4.1.2, or 4.1.3
this Agreement, Consultant shall be free to engage in the Company Business or in
any other business that competes with a business conducted by the Company or
Buyer, either directly or indirectly, within the United States, Canada, Mexico
or anywhere else in the world, without restrictions of any nature whatsoever.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE COMPANY: CONSULTANT:
XXXXX XXXXXX ENTERTAINMENT CORPORATION
/s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx, individually
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: President
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