Consulting Agreement
This Consulting Agreement (the Agreement)is entered into on the 20th day
of March, 2006, between American Development & Investment Fund, Inc., a Nevada
corporation (the Company), and CF Consulting, LLC. a Florida limited liability
company (the Consultant) for the purpose of engaging the Consultant to advise
and assist the Company in perfecting and maintaining the status of the Company
as a Business Development Company (BDC) regulated under the Investment Company
Act of 1940 and for other services.
1. Conversion Services.
a. The Consultant shall assist and advise the Company on the processes and
procedures for the Company to perfect an election to be regulated as a BDC
under the Investment Company Act of 1940, in preparing and reviewing necessary
documents in connection with such election, establishing all required corporate
governance rules and procedures, and generally assisting the Company with the
BDC conversion and operations process, including assisting in the preparing and
filing of an application for 1E exemption for shares of the Company and the
filing of all required regulatory filings of the Company during the term of
this Agreement.
b. The Conversion Services will include: (i) assisting in the drafting of
required corporate board resolutions; (ii) assisting in drafting an independent
investment policy; (iii)assisting in drafting of independent directors
investment guidance policy; (iv) coordinating of the execution of documents
and activities of other experts who participate in the Conversion;(v)
assisting in filing the Company BDC election with the SEC that fully complies
with the requirements for such election; (vi) upon Conversion, assisting with
the filling of a Form 1E exemption application for each Company; (vii)
assisting in the response to any comments from the SEC in regards to the 1E
application; (ix) assisting in the procurement of a favorable legal opinion
from outside counsel to the Company that filings made by the Company qualify
the Company to be regulated as a BDC and that the shares listed in the Notice
on Form 1E may be sold to the public without registration under the Securities
Act of 1933 in reliance on the exemption set forth in Regulation E (the
Compliance Opinion); (x) assisting with the preparation and filing of a 211
application for trading of the shares of the Company and responding to all
comments or requests for additional information from the OTC Compliance Unit
of the NASD; and (xi) assisting with such other matters as are mutually agreed
as part of the Conversion Services.
c. It is understood and agreed that the adoption of the resolutions,
policies and procedures developed by the Consultant for the Company which
qualify it to be regulated as a BDC, the filing of an election to be treated
as a BDC on SEC Form N-54A, and the receipt of the Compliance Opinion, shall
be conclusive evidence that the performance by Consultant is satisfactory to
the Company with respect to the services, and that the Consultant has
performed all Conversion Services satisfactorily in accordance with this
Agreement as to the Company.
2. Additional Services. In addition to the Conversion Services, Xxxxxx
Xxxxxx, the Consultants managing member, shall serve as Chief Compliance
Officer and corporate counsel for the Company, and initially as Chief
Executive and Financial Officer for the Company for a period of two years
from the date of the completion of this Agreement, at no additional cost or
expense to the Company other than the Compensation to Consultant set forth
in Section 6 hereof, and shall execute all required regulatory filings for the
Company. Additionally, the Company will initially house its corporate
headquarters within Consultants office. The Company will pay the Consultant
the sum of $450.00 per month for office rent, telephone, facsimile, Internet
connection, network access, financial accounting systems, web hosting and
related information services.
3. Confidentiality of Services. Introductions to and use of professionals
and other consultants made by the Consultant will be considered exclusive for
purposes of this Agreement. Documents prepared by Consultant in connection
with this Agreement and the services provided shall not be disclosed or given
to third parties, without prior approval from Consultant, except as required
by SEC rules and regulations relating to filing and disclosure or otherwise
required to be disclosed by law or administrative or judicial process.
Notwithstanding the foregoing, any corporate document (minutes, committee
charter, policy statement, etc.)once adopted by the BDC shall not be
confidential information and may be disclosed by the BDC as it deems
appropriate. The Consultant will use its reasonable best efforts to
structure, draft, present and negotiate on behalf of Company to accomplish the
Conversion.
4. Collection of Information.
a. As soon as possible following execution of this Agreement, the
Consultant will meet with the Company at its offices to review the available
resources, time frames, and critical participants, and will develop a schedule
for execution of the proposed strategy.
b. The initial undertakings by the Consultant will include
the collection, confirmation and verification of the following information for
each Company; (i) articles of incorporation or other charter documents and any
amendments thereto; (ii) by-laws; (iii) minutes of all meetings of the board of
directors since inception; (iv) minutes of all meetings of shareholders; (v)
all communications with shareholders, including notices regarding annual
meetings, special meetings, along with copies of the agendas of such meetings;
(vi) leases the Company is currently a party to; (vii) list of all pending or
threatened litigation, with legal counsels statement as to current status and
likely outcome as well as a list of any past litigation with outcome noted;
(viii) merger and acquisition agreements, letters of intent, and plans of
reorganization entered into by the Company; (ix) employment agreements and
questionnaires completed by all board members and officers of the Company;
(x) any stock options, plans or agreements of the Company; (xi) any finders
fee agreements or agreements with any promoters; (xii) the Companys most
recent business plans; (xiii) list of shareholders with number of shares
owned certified as correct by the Companys transfer agent; (xiv) any
material agreements to which the Company is a party; and (xv) the amount of
money that the Company wishes to raise, and the potential sources, if known.
c. After collection of the above described information about the
Company, the Consultant will coordinate with experts engaged by the Company at
the Companys expense or by Consultant as part of the Acquisition Services or
Consulting Services for the Company, and prepare documents for the
Acquisitions and Conversions, which shall be reasonably acceptable to Company
counsel. The Consultant will use its reasonable best efforts to accomplish a
successful Acquisition and Conversion of the Company utilizing information
obtained by Consultant from the Company.
5. Information provided by the Company. In connection with Consultants
activities hereunder, the Company will furnish the Consultant and their counsel
upon request with all material and information regarding the business and
financial condition of the Company and its business plans available to the
Company (all such information so furnished being the Information). The
Consultant will perform due diligence based on the Information; however, the
Company recognizes and confirms that the Consultant: (a) will use and rely
primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by this
Agreement having only verified the information concerning the Company in
the manner specified in Section 4(b), above; (b) does not assume
responsibility for the accuracy or completeness of the Information and such
other information as may be obtained as part of the Consulting Services;
(c) will not make an appraisal of any securities or assets of the Company or
any Company; and (d) retains the right to continue to perform due diligence
during the course of the engagement. The Consultant agrees to keep the
Information confidential, so long as it is and remains non-public, unless
disclosure is required by law or is requested by any government or
regulatory agency or body, and the Consultant will not make use thereof,
except in connection with services provided hereunder for the Company.
6. Compensation.
a. Base Compensation. As compensation for the Consulting Services
rendered and to be rendered hereunder by the Consultant, the Company agrees to
pay to the Consultant the sum of $5,000 per month for a period of twelve (12)
months commencing February 1, 2006, and the sum of $7,500 per month for the
subsequent period of twelve (12) months, commencing with the month in which
this Agreement is approved. Any out of pocket expenses incurred by Consultant
for travel, telephone, postage, and other items shall be reimbursed by the
Company, on presentation of an expense report and receipts for such expenses.
b. Bonus Compensation. In addition to the Base Compensation, Consultant
shall be entitled to bonus compensation in the amount of $25,000, paid at the
rate of $5,000 per month for five consecutive months, commencing thirty (30)
days after the later of (i) the effective date of a 1-E exemption application
filed for the Company or (ii) the acceptance of the Company common stock for
trading on an exchange or other electronic trading medium.
7. Termination. The Consultant or the Company, with thirty days prior
written notice, without cause, may terminate this engagement at any time
(except for Schedules A and B and Sections 11,12, and 14 of this Agreement
that shall remain in full force and effect), provided however, that with
respect to any Company already acquired by the Company or its designees
during the term of this Agreement, the Compensation provided for herein
shall continue for the full twenty-four month term notwithstanding any
termination, except Compensation shall cease thirty days after notice:
(a) if such termination is for willful misfeasance, bad faith or gross
negligence in the performance of the Consultants duties or by reason of the
reckless disregard of the Consultants duties and obligations under this
Agreement (to the extent applicable, as the same shall be determined in
accordance with the Investment Company Act and any interpretations or
guidance by the SEC or its staff there under) or (b) as a result of the
voluntary resignation or discharge of the Consultant?s managing member as
the CFO or CCO of the subject Company for Cause. For purposes of this
Agreement, the term Cause shall mean any of the following acts or events:
(i) the CCOs or CFOs gross negligence, gross dereliction of duty, willful
misconduct or repeated material failure of CCO or CFO to render services to
the Company in accordance with his assigned duties; (ii) the CCOs or CFOs
conviction of, or plea of nolo contendere, to a felony (other than a felony
involving a traffic violation); or (iii) the CCOs or CFOs disloyalty,
dishonesty or the commission by CCO or CFO of an act of fraud, embezzlement
or willful disregard of the rules or policies of the Company, any of which
results in loss, damage or injury to the Company, whether directly or
indirectly. For purposes of this paragraph, no act, or failure to act, on the
CCOs or CFOs part shall be considered willful unless such act, or failure to
act, is in bad faith or without reasonable belief that his action or omission
was in the best interests of the Company.
8. Use of Name. The Company agrees that any reference to the Consultant in
any release, communication, or material distributed to prospective investors or
lenders is subject to the Consultant?s prior written approval, which will not
be unreasonably withheld. If the Consultant resigns prior to the dissemination
of any such release, communication or material, no reference shall be made
therein to the Consultant.
9. Use of Advice. No advice rendered by the Consultant in connection with
the services performed by the Consultant pursuant to this Agreement will be
quoted by either party hereto, nor will any such advice be referred to in any
report, document, release or other communication, whether written or oral,
prepared, issued or transmitted by such party or any person or corporation
controlling, controlled by or under common control with such party or any
director, officer, employee, agent or representative of any such party,
without the prior written authorization of all parties hereto, except to the
extent required by law or compelled by judicial, administrative or
regulatory process (in which case the appropriate party shall so advise the
other in writing prior to such use and shall consult with the other with
respect to the form and timing of disclosure), provided that the foregoing
shall not prohibit appropriate internal communication or reference with
respect to such advice internally within such parties.
10. Representations and Warranties.
a. The Company represents and warrants to the Consultant
(i) that this Agreement has been duly authorized, executed and delivered
by the
Company, and, assuming the due execution by the Consultant, constitutes a
legal, valid and binding Agreement of the Company enforceable against the
Company in accordance with its terms. The Company represents that, to the
best of its knowledge, the Information will not, when delivered to Consultant
specifically for inclusion in regulatory filings, contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein in light of the circumstances under which they were made
not misleading. The Company agrees to advise the Consultant promptly of the
occurrence of any event or any other change prior to any filing known to it
which results in the Information containing any untrue statement of a
material fact or omitting to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(ii) Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada.
(iii) Authorization. The Company has full power, legal capacity and
authority to enter into this Agreement, and to perform all of its obligations
hereunder. This Agreement has been effectively authorized by all necessary
action, corporate or otherwise, on the part of the Company, which
authorizations remain in full force and effect, has been duly executed and
delivered by the Company, and no other proceedings on the part of the Company
are required to authorize this Agreement. This Agreement constitutes the
legal, valid and binding obligation of the Company and is enforceable with
respect to the Company in accordance with its terms, except as enforcement
hereof may be limited by bankruptcy, insolvency, reorganization, priority or
other laws of court decisions relating to or affecting generally the
enforcements of creditors' rights or affecting generally the availability
of equitable remedies. Neither the execution and delivery of this Agreement,
nor the performance by the Company of the services contemplated hereby, or
compliance with any of the provisions hereof, will violate any judgment, order,
injunction, decree, statute, rule applicable to the Company or the transactions
or services contemplated hereby. No authorization, consent or approval of any
public body of authority or any third party is necessary for the Company to
perform the services contemplated by this Agreement.
(iv) No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best of the Company?s
knowledge, threatened against or affecting the Company at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality, domestic or
foreign, or affecting any of the officers or directors or principal
stockholders of the Company in connection with the business, operations or
affairs of the Company, which might result in any adverse change in the
business of the Company, or which might prevent the Company from undertaking
the obligations contemplated by this Agreement.
(iv) Compliance with Law and Government Regulations. The Company is in
compliance, and during the term of this Agreement will be in compliance, with
all applicable statutes, regulations, decrees, orders, restrictions, guidelines
and standards, whether mandatory or voluntary, imposed by the United States of
America, any state, county, municipality or agency of any thereof, which the
Company is subject. Without limiting the generality of the foregoing, the
services contemplated by this Agreement does not and will not: (a) involve
effecting transactions in any security, or inducing, attempting to induce the
purchase or sale of any security which would require the Company or its
officers or employees to register under the Securities Exchange Act of 1934, as
amended; (b) activities which would require the Company or its agents to
register under the Investment Advisors Act of 1940, as amended; or (c)
activities which would under state regulation relating to broker-dealers or
investment advisors require registration or licensing, unless the Company
satisfies any such requirements.
b. The Consultant represents and warrants to the Company that:
(i) Organization. The Consultant is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Florida.
(ii) Authorization. The Consultant has full power, legal capacity and
authority to enter into this Agreement, and to perform all of its obligations
hereunder. This Agreement has been effectively authorized by all necessary
action, corporate or otherwise, on the part of the Consultant, which
authorizations remain in full force and effect, has been duly executed and
delivered by the Consultant, and no other corporate proceedings on the part
of the Consultant are required to authorize this Agreement. This Agreement
constitutes the legal, valid and binding obligation of the Consultant and is
enforceable with respect to the Consultant in accordance with its terms,
except as enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, priority or other laws of court decisions relating to or
affecting generally the enforcements of creditors' rights or affecting
generally the availability of equitable remedies. Neither the execution and
delivery of this Agreement, nor the performance by the Consultant of the
services contemplated hereby, or compliance with any of the provisions
hereof, will violate any judgment, order, injunction, decree, statute, rule
applicable to the Consultant or the transactions or services contemplated
hereby. No authorization, consent or approval of any public body of
authority or any third party is necessary for the Consultant to perform the
services contemplated by this Agreement.
(iii) No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best of the Consultant?s
knowledge, threatened against or affecting the Consultant at law or in equity
or before or by any federal, state, municipal or other governmental
department, commission, court, board, bureau, agency or instrumentality,
domestic or foreign, or affecting any of the officers or directors or
principal stockholders of the Consultant in connection with the business,
operations or affairs of the Consultant, which might result in any
adverse change in the business of the Consultant, or which might prevent the
Consultant from performing the services contemplated by this Agreement.
(iv) Compliance with Law and Government Regulations. The Consultant is
in compliance, and during the term of this Agreement will be in compliance,
with all applicable statutes, regulations, decrees, orders, restrictions,
guidelines and standards, whether mandatory or voluntary, imposed by the
United States of America, any state, county, municipality or agency of any
thereof, which the Consultant is subject. Without limiting the generality of
the foregoing, the services contemplated by this Agreement does not and will
not: (a) involve effecting transactions in any security, or inducing,
attempting to induce the purchase or sale of any security which would require
the Consultant or its officers or employees to register under the Securities
Exchange Act of 1934, as amended; (b) activities which would require the
Consultant or its agents to register under the Investment Advisors Act of 1940,
as amended; or (c) activities which would under state regulation relating to
broker-dealers or investment advisors require registration or licensing.
11 Indemnity.
a. In partial consideration of the services to be rendered hereunder, the
Company agrees to indemnify the Consultant in accordance with Schedule A
attached hereto.
b. In partial consideration of the services to be rendered hereunder, the
Consultant agrees to indemnify the Company in accordance with Schedule B
attached hereto.
12. Conditions of Engagement. It is understood that the execution of
this Agreement shall not be deemed or construed as obligating the Consultant to
place or arrange any financing for the Company.
13. Survival of Certain Provisions. The indemnity and contribution
agreement contained in Schedules A and B to this Agreement and the
representations and warranties of the Company and Consultant contained in
Section 11 of this Agreement shall remain operative and in full force
and effect regardless of: (a) any investigation made by or on behalf of
Consultant, or any person controlling it, (b) completion of any financing,
(c) the resignation of the Consultant or any termination of the Consultant?s
services or (d) any termination of this Agreement, and shall inure
to the benefit of any successors, assigns, heirs and personal representatives
of the Company, the Consultant, and the indemnified parties .
14. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be delivered as follows:
if to the Company, at
American Development & Investment Fund, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx, XX 00000
Telephone 000-000-0000
Facsimile 000-000-0000
if to Consultant, at:
CF Consulting, LLC.
X.X. Xxx 000
Xxxxx, XX 00000-0000
Telephone 000-000-0000
Facsimile 000-000-0000
or at such other address as such person may hereafter give notice to the
others.
15. Counterparts. This Agreement may be executed in two or more
counterparts and the counterparts, when executed, shall constitute a single,
enforceable document. The signature on counterparts may be transmitted by fax,
with documents so transmitted having the same force and effect as the executed
originals.
16. Third Party Beneficiaries. This Agreement has been made and is made
solely for the benefit of the Company, the Consultant and the other Indemnified
Persons referred to in Schedules A and B hereto and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement.
17. Construction. This Agreement incorporates the entire understanding of
the parties and supersedes all previous agreements relating to the subject
matter hereof should they exist, and shall be governed by, and construed in
accordance with, the laws of the State of Florida, without regard to principles
of conflicts of law, and shall be enforced in any applicable court in the
State of Florida, except as otherwise provided in Section 21 below.
18. Headings. The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not part of this
Agreement.
19. Press Announcements. At any time after the completion of the
Conversion, and with the approval of the Company (which approval shall not be
unreasonably withheld or delayed), the Consultant may at its own expense place
an announcement in such newspapers and publication as it may choose, stating
that Consultant has acted as exclusive financial advisor and sole conversion
agent to the Company in connection with the transaction contemplated by this
Agreement.
20. Amendment. This Agreement may not be modified or amended
except in writing duly executed by the parties hereto.
21. Arbitration. The Parties agree that all questions or matters in
dispute with respect to this Agreement shall be submitted to arbitration on the
following terms:
a. It shall be a condition precedent to the right of any party to submit
any matter to arbitration pursuant to the provisions hereof, that any party
intending to refer any matter to arbitration shall have given not less than
five business days prior written notice of its intention to do so to the other
party together with particulars of the matter in dispute. On the expiration
of such five business days the party who gave such notice may proceed to
refer the dispute to arbitration as provided for below.
b. The party desiring arbitration shall appoint one arbitrator, and shall
notify the other party of such appointment, and the other party shall, within
five business days after receiving such notice, appoint an arbitrator, and the
two arbitrators so named, before proceeding to act, shall, within five business
days of the appointment of the last appointed arbitrator, unanimously agree on
the appointment of a third arbitrator, to act with them and be chairman of the
arbitration herein provided for. If the other party shall fail to appoint an
arbitrator within five business days after receiving notice of the appointment
of the first arbitrator, and if the two arbitrators appointed by the parties
shall be unable to agree on the appointment of the chairman, the chairman shall
be appointed in accordance with the rules for commercial arbitration of the
American Arbitration Association. Except as specifically otherwise provided
in this section, the arbitration herein provided for shall be conducted in
accordance with the rules for commercial arbitration of the American
Arbitration Association and shall be conducted in the State of Florida. The
chairman, or in the case where only one arbitrator is appointed, the single
arbitrator, shall fix a time and place for the purpose of hearing the evidence
and representations of the parties, and he shall preside over the arbitration
and determine all questions of procedure not provided for by the rules
for commercial arbitration of the American Arbitration Association. or this
section. After hearing any evidence and representations that the parties may
submit, the single arbitrator, or the arbitrators, as the case may be, shall
make an award and reduce the same to writing, and deliver one copy thereof to
each of the parties.
c. The Parties agree that the award of a majority of the arbitrators, or
in the case of a single arbitrator, of such arbitrator, shall be final and
binding upon each of them, and their shall be no appeal from such award.
d. Any award in the arbitration shall be limited to actual contractual
damages, and there shall be no award of consequential or punitive damages,
attorneys? fees or other expenses. Each party expressly waives and disclaims
the right to a jury trial relating to or arising out of this Agreement and
expressly accepts the arbitration procedure set forth herein as the sole
means of resolving any disputes or disagreements.
22. Legal Services. The Consultant when retained may be
recommending and referring legal counsel to assist with the Conversion.
Executed and delivered by the undersigned, intending to be bound thereby,
as of and effective on the date indicated next to the signature of each party
below.
Consultant:
CF Consulting, LLC
/s/ Xxxxxx Xxxxxx Date: March 22_, 2006
--------------------
Xxxxxx Xxxxxx
Managing Director
Company:
AMERICAN DEVELOPMENT & INVESTMENT FUND, INC.
By /s/ Xxxxxx Xxxxxx Date: March 22, 2006
-------------------
Xxxxxx Xxxxxx
President
at the direction of the Board of Directors
Agreed as to Section 2:
/s/ Xxxxxx Xxxxxx Date: March 22, 2006
--------------------
Xxxxxx Xxxxxx
