ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ("Agreement") is made effective as of the 7th
day f March 2001, by and between Xxxx X. Xxxx, an individual ("Adviso
r") and Xxxx Industries, Inc., a Nevada
corporation (the "Company").
WHEREAS, Advisor and Advisor's Personnel (as defined below) have exper
ienc in evaluating and effecting mergers and acquisitions, supervisin
g corporate management, and in
performing general administrative duties for publicly-held companies a
nd development stage investment ventures; and,
WHEREAS, the Company desires to retain Advisor to advise and assist th
e Copany in restructuring and in its continued development on the ter
ms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agrements contained herein, and for other good and valuable considera
tion, the receipt and sufficiency of which
is hereby acknowledged, the Company and Advisor agree as follows:
1. Engagement. The Company hereby retains Advisor to perform the foll
owin (collectively,
the "Services"):
(a) act as exclusive financial advisor to the Company in connection wi
th te proposed restructuring of the Company and its subsidiaries wher
xxx Advisor will, upon the
Company's request, assist the Company and its professional advisors in
(i) the preparation of documentation, (ii) merger, acquisition and se
ttlement negotiations, and (iii) the preparation and filing with the S
ecurities and Exchange Commission (the "Commission") of disclosure sta
tements pursuant to the Securities Act of 1933, as amended (the "Secur
ities Act") or the Securities Exchange Act of 1934 (the "Exchange Act"
) or other activities as may be mutually agreed between Advisor and th
e Copany;
(b) provide assistance to the Company in its understanding of and resp
onse to market
conditions;
(c) introduce the Company and its professional advisors to market make
rs, nderwriters, and others in the securities industry who would be o
f use to the Company;
(d) act as a financial advisor in connection with such assistance as t
he Cmpany may request from time to time in connection with (i) the pu
rchase of other businesses
("Business Opportunities"), or joint ventures or mergers between the C
ompany and an enterprise or individual currently not an Affiliate of t
he Company, as that term is defined in Regulations S-X of the Exchange
Act (collectively, a "Merger Transaction"), and (ii) the potential s
ale of all or a portion of the Company's assets (a "Sale Transaction")
; and
(e) in the performance of its duties hereunder, Advisor will, and will
caus its Advisor's Personnel to, comply with all applicable laws, rul
es and regulations, and diligently
perform the Services in good faith, and in the best interests of the C
ompany.
2. Information on the Company
In connection with Advisor's activities hereunder, the Company will fu
rnis Advisor and its counsel with all material and information regard
ing the business and financial condition of the
Company as may be necessary for the Advisor to perform the Services as
contemplated herein (all such information so furnished being referred
to herein as the "Information"). The Company recognizes and acknowled
ges that Advisor (a) will use and rely solely on the Information, an
d on information available from generally recognized public sources, i
n performing the Services contemplated by this Agreement without havin
g inependently verified the same; (b) does not assume responsibility f
or the accuracy or completeness of the Information; (c) will not make
an appraisal of any assets or liabilities of the Company; and (d) xxxx
ins the right to continue to conduct due diligence on the term of this
Agreement.
3. Use of Advice
Except as required by applicable state or federal securities rules and
reguations, no statements made or advice rendered by Advisor in conne
ction with the Services performed by
the Advisor pursuant to this Agreement will be quoted by, nor will any
such statements or advice be referred to, in any report, document, rel
ease or other communication, whether written or oral, prepared, issued
or transmitted by the Company or any person or corporation controlling
, controlled by or under common control with, the Company or any direc
tor, officer, employee, agent or representative of any such person, wi
thout the prior written authorization of Advisor, which may be given o
r wihheld in its sole discretion. However, the Company may disclose o
r refer to such advice or statements without being required to obtain
consent to the extent required by law (in which case the appropriate p
arty shall so advise Advisor in writing prior to such disclosure or us
e and shall consult with Advisor with respect to the form and timing
of disclosure).
4. Term
Unless terminated earlier pursuant to paragraph 14 below, this Agreeme
nt xxxx have an initial term of two (2) years (the "Primary Term"), w
ith an effective date retroactive to the date the
Services were firstperformed by Advisor, which was on or about Decembe
r 1, 2000 (the "Effective Date"). At the conclusion of the Primary Te
rm this Agreement will automatically be extended on an annual basis (t
he "Extension Period") unless Advisor or the Company shall serve writt
en notice on the other party terminating the Agreement. Any notice to
terminate given hereunder shall be in writing and shall be delivered a
t least thirty (30) days prior to the end of the Primary Term or any
subsequent Extension Period.
5. Time and Effort of Advisor
Advisor shall allocate such time and personnel acceptable to the Compa
ny (he "Advisor's Personnel") as it deems reasonably necessary to pro
vide the Services. The particular amount
of time may vary from day to day or week to week. Except as otherwise
agreed, Advisor's monthly statement identifying, in general, tasks per
formed for the Company shall be conclusive evidence that the specific
services referenced therein have been performed. Additionally, in the
absence of willful misfeasance, bad faith, negligence or reckless disr
egard for the obligations or duties hereunder by Advisor, or a breach
of any material provision of this Agreement, neither Advisor nor Advis
or'sPersonnel shall be liable to the Company or any of its shareholder
s for any act or omission in the course of or connected with rendering
the Services, including but not limited to losses that may be sustaine
d in any corporate act involved in respect of any restructuring, Sale
Transaction or Merger Transaction with a Business Opportunity undertak
en b the Company as a result of introductions or advice provided by Ad
visor or Advisor's Personnel.
6. Compensation
The Company agrees to pay Advisor a fee for the Services provided by A
dvisr pursuant to
this Agreement, as follows:
(a) Advisory Fee. The Company shall pay Advisor a monthly fee ("Advis
xxx xx") equal to One Thousand Five Hundred Dollars ($1,500), payable
monthly in advance in
cash.
7. Indemnification
In partial consideration of the Services to be rendered hereunder the
Compny shall indemnify Advisor and its officers, directors, and agent
s, (each an "Advisor Indemnified Person")
against any action brought against Advisor or any Advisor Indemnified
Person by the Company, any shareholder, creditor or party related to t
he Company in connection with this engagement, the Restructuring, or a
ny merger or transaction affected by Advisor unless such action or pro
ceeding is based solely upon willful misconduct or the bad faith or gr
oss negligence of Advisor or any such Indemnified Person.
Similarly, Advisor shall indemnify the Company and its officers, direc
tors and agents, (each a "Company Indemnified Person") against any ac
tion brought against the Company, or any
Company Indemnified Person, in connection with or arising out of this
Agreement, or for willful malfeasance, bad faith, negligence or reckle
ss disregard of the Advisor's duties and obligations hereunder.
8. Costs and Expenses
All third party and out-of-pocket expenses incurred by Advisor in the
perfrmance of the Services shall be paid by the Company, or Advisor s
hall be reimbursed if paid by Advisor on
behalf of the Company, within ten (10) days of receipt of written noti
ce by Advisor; provided, however, that the Company must approve in ad
xxxxx all such expenses.
9. Place of Services
The Services provided by Advisor or Advisor's Personnel hereunder will
be prformed at Advisor's offices except as otherwise mutually agreed
by Advisor and the Company.
10. Independent Contractor
Advisor and Advisor's Personnel will act as independent contractors in
the erformance of its duties under this Agreement. Accordingly, Advi
sor will be responsible for payment of all
federal, state, and local taxes on compensation paid under this Agreem
ent, including income and social security taxes, unemployment insuranc
e, and any other taxes due relative to Advisor's Personnel, and any an
d all business license fees as may be required. This Agreement neithe
r expressly nor implicitly creates a relationship of principal and age
nt, or employee and employer, between Advisor's Personnel and the Comp
any. Neither Advisor nor Advisor's Personnel are authorized to enter i
nto any agreements on behalf of the Company. The Company expressly re
tains the right to approve, in its sole discretion, each Business Oppo
rtunity introduced by Advisor, and to make all final decisions with re
spect to affecting a transaction on any Business Opportunity.
11. Rejected Business Opportunity
If, during the Primary Term of this Agreement or any Extension Period,
the ompany elects not to proceed to acquire, participate or invest in
any Business Opportunity identified and/or
selected by Advisor, such Business Opportunity shall revert back to an
d become proprietary to Advisor, and Advisor shall be entitled to acqu
ire or broker the sale or investment in such rejected Business Opportu
nity for its own account, or submit such assets or Business Opportunit
y elsewhere. In such event, Advisor shall be entitled to any and all
profits or fees resulting from Advisor's purchase, referral or placeme
nt o any such rejected Business Opportunity, or the Company's subseque
nt purchase or financing with such Business Opportunity if in circumve
ntion of Advisor. In addition, Advisor shall reimburse the Company fo
r any moneys that have been expended on such Business Opportunity that
the Advisor acquires or brokers for its own account or submits
elsewhere.
12. No Agency Express or Implied
This Agreement is not intended to result in any partnership, employmen
t, aency, joint venture or other relationship between the parties oth
er than that of independent contractors.
Other than as expressly set forth in this Agreement, no party shall ha
ve the right, by virtue of this Agreement or otherwise, to bind the ot
her party to any obligation, charge, or other liability whatsoever, no
r shall either party represent to any person or business organization
that it has such right or that any other relationship between the part
ies exists other than a contract for the express purposes set forth
herein.
13. Termination
The Company and Advisor may terminate this Agreement prior to the expi
ratin of the Primary Term upon the mutual written consent of the part
ies. Failing to have mutual consent,
without prejudice to any other remedy to which the terminating party m
ay be entitled, if any, either party may terminate this Agreement with
thirty (30) days written notice under the following conditions:
(a) By the Company.
(i) If during the Primary Term of this Agreement or any Extension Peri
od, Advisor is unable to provide the Services as set forth herein for
thirty (30) consecutive business days because of illness, accident, or
other incapacity of Advisor's Personnel;
(ii) If Advisor willfully breaches or neglects the duties required or
reasnably requested to be performed hereunder; or
(iii) In the event of any other breach of a material term of this Agre
emen by Advisor or Advisor's Personnel; or
(iv) If the Advisor institutes, makes a general assignment for the ben
efit of
creditors, has instituted against it any bankruptcy proceeding
for reorganization or for rearrangement of its financial affairs, file
s a petition in a court of bankruptcy, or is adjudicated a bankrupt;
or,
(v) If any of the disclosures made herein or subsequent hereto by the
Advior to the Company are determined to be materially false or mislea
ding, or if the
Advisor is convicted of or enters a plea of guilty ornolo contendere t
o a felony or misdemeanor involving fraud, embezzlement, theft or dish
xxxxxx or other criminal conduct.
(b) By Advisor.
(i) If the Company breaches this Agreement or fails to make any paymen
ts o
provide information required hereunder; or,
(ii) If the Company ceases business, or sells a controlling interest t
x x xxxx party, or agrees to a consolidation or merger of itself with
or into another
corporation, or enters into such a transaction outside of the scope of
this Agreement, or sells substantially all of its assets to another co
rporation, entity or individual outside of the scope of this Agreement
; or,
(iii) If the Company has a receiver appointed for its business or asse
ts, r otherwise becomes insolvent or unable to timely satisfy its obl
igations in the
ordinary course of business, including but not limited to the obligati
on to pay the Advisory Fee; or,
(iv) If the Company institutes, makes a general assignment for the ben
efitof
creditors, has instituted against it any bankruptcy proceeding
for reorganization for rearrangement of its financial affairs, files a
petition in a court of bankruptcy, or is adjudicated a bankrupt; or,
(v) If any of the disclosures made herein or subsequent hereto by the
Compny to
Advisor are determined to be materially false or misleading
.
In the event Advisor elects to terminate without cause or this Agreeme
nt i terminated prior to the expiration of the Primary Term or any Ex
tension Period by mutual written agreement,
or by the Company for thereasons set forth in A(i) and (ii) above, the
Company shall only be responsible to pay Advisor for unreimbursed expe
nses, the Advisory Fee accrued up to and including the effective date
of termination. If this Agreement is terminated by the Company for an
y other reason, or by Advisor for reasons set forth in B(i) through (v
) above, Advisor shall be entitled to any outstanding unpaid portion o
f rembursable expenses, if any, and any unpaid Advisory Fee for the re
mainder of the unexpired portion of the applicable term (Primary Term
or Extension Period) of the Agreement.
14. Confidentiality; Non-Circumvention; Non-Competition;
Non-Solicitation
The Company and Advisor acknowledge and agree that non-public informat
ion oncerning each party's plans, strategies, and overall business op
erations, and the identity and sources of
each party's Business Opportunities, is highly confidential and propri
etary to each party ("Confidential Information").
The parties acknowledge that such Confidential Information represents
a leitimate, valuable, and protectable interest of each party and giv
es each party a competitive advantage, which
would otherwise be lost if the Confidential Information was improperly
disclosed. The parties further acknowledges that unauthorized or impr
oper disclosure or use of Confidential Information would cause each pa
rty irreparable harm and injury. The parties therefore agree that, fo
r a period of two (2) years following the later of the date hereof or
the termination of this Agreement, neither party will disclose or thre
atento disclose the Confidential Information, except as required by la
w, to any person, partnership, company, corporation or to any other bu
siness or governmental organization or agency, as the case may be, wit
hout the express written consent of the other party. The parties furt
her agree not to use or threaten to use the Confidential Information i
n an way contrary to the interests of Advisor. The parties further xx
xxxx that all ownership rights to the Confidential Information are ret
ained by each respective party, and that no right of ownership shall p
ass to the other party by virtue of this Agreement.
Advisor hereby agrees for itself, and shall obtain the agreement of ea
ch Avisor's Personnel prior to permitting such person to provide Serv
ices to the Company hereunder, that it (or
such person) shall not, directly or indirectly, during the Term of thi
s Agreement and for a period of one (1) year thereafter, engage in, or
provide services to or act as an owner, manager, advisor, director, pa
rtner, joint venturer or in any other capacity to any person which eng
ages in or proposes to engage in, the business of owning, operating or
managing themed restaurants which do or would be reasonably expected t
o copete with the Company. In addition, neither Advisor nor any of su
ch other persons shall, directly or indirectly, use any Confidential I
nformation for any such purpose, nor solicit any employee, vendor, cus
tomer or other business relationship away from the Company for any
purpose at any time.
15. Remedies
Advisor and the Company acknowledge that in the event of a breach of t
his greement by either party, money damages may be inadequate and the
non-breaching party may have no
adequate remedy at law. Accordingly,in such event, such rights or obl
igations shall be enforceable in a court of equity by a decree of spec
ific performance or other injunctive or equitable relief. Such remedy
, however, shall be cumulative and non-exclusive and shall be in addit
ion to any other remedy to which the parties may be entitled.
16. Miscellaneous
(a) Subsequent Events. Advisor and the Company each agree to notify t
he oher party if, subsequent to the date of this Agreement, either pa
rty incurs obligations which
could compromise its efforts and obligations under this Agreement.
(b) Amendment. This Agreement may be amended or modified at any time
and n any manner only by an instrument in writing executed by the par
ties hereto.
(c) Further Actions and Assurances. At any time and from time to time
, eah party agrees, at its or their expense, to take actions and to e
xecute and deliver documents
as may be reasonably necessary to effectuate the purposes of this Agre
ement.
(d) Waiver. Any failure of any party to this Agreement to comply with
any f its obligations, agreements, or conditions hereunder may be wai
ved in writing by the
party to whom such compliance is owed. The failure of any party to th
is Agreement to enforce at any time any of the provisions of this Agre
ement shall in no way be construed to be a waiver of any such provisio
n or a waiver of the right of such party thereafter to enforce each an
d every such provision. No waiver of any breach of or non-compliance
with this Agreement shall be held to be a waiver of any other or subse
quent breach or non-compliance.
(e) Assignment. Neither this Agreement nor any right created by it sh
all e assignable by either party without the prior written consent of
the other.
(f) Notices. Any notice or other communication required or permitted
by tis Agreement must be in writing and shall be deemed to be properl
y given when delivered in person to an officer of the other party, whe
n deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public tele
graph company for transmittal, or when sent by facsimile transmission
charges prepared, provided that the communication is addressed:
(i) In the case of the Company:
Xxxx Industries, Inc.
c/o Holoworld Inc.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which does not constitute notice) to:
Feldhake, August & Xxxxxxxxx
00000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. August, Esq.
(ii) In the case of Advisor:
Xx. Xxxx Xxxx
0000 XxxXxxxxx Xx., Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to:
Xx. Xxxxxxx X. Xxxx
Xxxxxx & Weed
0000 XxxXxxxxx Xxxxx, Xxxxx #000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
or to such other person or address designated in writing by the
Company or Advisor to receive notice.
(g) Headings. The section and subsection headings in this Agreement a
re iserted for convenience only and shall not affect in any way the m
eaning or interpretation of this
Agreement.
(h) Governing Law. This Agreement shall be governed by and construed i
n acordance with the internal laws of the State of California applica
ble to the performance and
enforcement of contracts made within such state, without giving effect
to the law of conflicts of laws applied thereby. In the event that an
y dispute shall occur between the parties arising out of or resulting
from the construction, interpretation, enforcement or any other aspect
of this Agreement, the parties hereby agree to accept the exclusive ju
risdiction of the Courts of the State of California sitting in and for
the County of Orange. In the event either party shall be forced to br
ing ny legal action to protect or defend its rights hereunder, then th
e prevailing party in such proceeding shall be entitled to xxxxxxxxxxx
xx from the non-prevailing party of all fees, costs and other expenses
(including, without limitation, the reasonable expenses of its attorne
ys) in bringing or defending against such action.
(i) Binding Effect. This Agreement shall be binding upon the parties
hereo and inure to the benefit of the parties, their respective heirs
, administrators, executors, successors,
and assigns.
(j) Entire Agreement. This Agreement contains the entire agreement be
twee the parties hereto and supersedes any and all prior agreements,
arrangements, or
understandings between the parties relating to the subject matter of t
his Agreement. No oral understandings, statements, promises, or induc
ements contrary to the terms of this Agreement exist. No representati
ons, warranties, covenants, or conditions, express or implied, other t
han as set forth herein, have been made by any party.
(k) Severability. If any part of this Agreement is deemed to be unenf
orceble the balance
of the Agreement shall remain in full force and e
ffect.
(l) Counterparts. A facsimile, telecopy, or other reproduction of thi
s Ageement 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 sa
me instrument, by one or more parties hereto and such executed copy ma
y be delivered by facsimile of similar instantaneous electronic transm
ission device pursuant to which the signature of or on behalf of such
party can be seen. In this event, such execution and delivery shall b
e considered valid, binding and effective for all purposes. At the re
quest of any party hereto, all parties agree to execute an original of
thisAgreement as well as any facsimile, telecopy or other reproduction
hereof.
(m) Time is of the Essence. Time is of the essence of this Agreement
and f each and
every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date above written.
ADVISOR WITNESS:
By: /s/ Xxxx X. Xxxx
------------
Name: Xxxx X. Xxxx
XXXX INDUSTRIES, INC. ATTEST:
By: /s/ Xxxx X. Xxxx By: /s/ Xxx X. Xxxxxx
------------ -------------
Name: Xxxx X. Xxxx Name: Xxx X. Xxxxxx
Title: President Title: Secretary
