EXHIBIT 10.1
CONSULTING AGREEMENT
AGREEMENT dated as of May 1, 2001, by and between NEW VISUAL
ENTERTAINMENT, INC., a Utah corporation (the "Company"), and ADVISOR ASSOCIATES,
INC., a New York corporation (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Company desires to receive the benefit of Consultant's
expertise and knowledge in evaluating financial investments and other matters;
NOW THEREFORE, in consideration of the mutual covenants and agreements
and upon the terms and subject to the conditions hereinafter set forth, the
parties do hereby covenant and agree as follows:
1. RETENTION OF CONSULTANT. The Company hereby retains and engages
Consultant, and Consultant accepts such engagement, subject to the terms and
conditions of this Agreement.
2. TERM. This Agreement shall be for a term of one (1) year commencing
on the date hereof and ending on April 30, 2002.
3. CONSULTING SERVICES. During the term hereof, Consultant shall
provide consulting and advisory services in connection with strategic business
planning and related matters (the "Consulting Services"). Consultant shall
solely and exclusively determine the methods, details and means of providing the
Consulting Services hereunder. The parties hereby acknowledge that Consultant
makes no representation or warranty whatsoever that it is a registered
broker-dealer or investment advisor or other similar capacity under applicable
securities laws.
4. DEVOTION OF TIME. Subject to the provisions hereof, during the term
of this Agreement, Consultant shall devote such of its time and effort as may be
necessary to the discharge of its duties hereunder. The Company acknowledges
that Consultant is engaged in other business activities, and that it will
continue such activities during the term hereof. Notwithstanding anything to the
contrary herein contained, Consultant shall not be restricted from engaging in
other business activities during the term of this Agreement, and Consultant
shall not be required to devote any specified amount of time to the Consulting
Services hereunder.
5. COMPENSATION. (a) In full consideration for the Consulting Services
hereunder, on the date hereof, the Company shall issue and deliver to Consultant
Common Stock Purchase Warrants for an aggregate of 1,000,000 shares of Common
Stock, par value $0.001per share, of the Company, as follows: (i) 500,000 shares
of Common Stock at an exercise price of $2.50 per share; (ii) 250,000 shares of
Common Stock at an exercise price of $5.00 per share; (iii) 250,000 shares of
Common Stock at an exercise price of $10.00 per share; (collectively, the
"Warrants"). The Warrants shall each provide for an exercise period of five (5)
years and certain registration rights and shall otherwise be in the form of
Exhibit A annexed hereto. The Warrants issued and delivered by the Company to
Consultant hereunder shall be deemed fully earned as of the date hereof, and
shall not be subject to or conditioned upon any event or circumstance
whatsoever.
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(b) In addition, the Company shall pay and reimburse
Consultant for all reasonable out-of-pocket expenses incurred in connection with
providing the Consulting Services hereunder.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Consultant that:
(a) The Company has the full power and authority to execute,
deliver and perform the terms and provisions of this Agreement, including
without limitation, the issuance and delivery of the Warrants and/or Warrant
Shares (as hereinafter defined). This Agreement constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
except to the extent that the enforceability hereof may be limited by
bankruptcy, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles (regardless of whether
enforcement is sought in equity or at law).
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(b) Neither the execution, delivery or performance by the
Company of this Agreement and the Warrants and/or Warrant Shares, nor compliance
by the Company with the terms and provisions hereof or thereof, will: (i)
materially contravene any provision of any applicable law, statute, rule or
regulation or any order, writ, injunction or decree of any court or governmental
instrumentality; (ii) conflict with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or obligation to create or impose) any lien
upon any of the property or assets of the Company pursuant to the terms of, any
indenture, mortgage, deed of trust, credit agreement or loan agreement or any
other agreement, contract or instrument to which the Company is a party or by
which any of its property or assets is bound or may be subject; or (iii) violate
any provision of the Articles of Incorporation or Bylaws (or similar
organizational documents) of the Company.
(c) All of the shares of Common Stock issuable to Consultant
upon exercise of the Warrants will be validly issued, fully paid and
non-assessable.
6A. REPRESENTATIONS AND WARRANTIES OF CONSULTANT. Consultant hereby
represents and warrants to the Company that:
(a) Consultant has the full power and authority to execute,
deliver and perform the terms and provisions of this Agreement. This Agreement
constitutes the legal, valid and binding obligation of Consultant enforceable in
accordance with its terms, except to the extent that the enforceability hereof
may be limited by bankruptcy, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
(regardless of whether enforcement is sought in equity or at law).
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(b) Neither the execution, delivery or performance by
Consultant of this Agreement, nor compliance by Consultant with the terms and
provisions hereof, will: (i) materially contravene any provision of any
applicable law, statute, rule or regulation or any order, writ, injunction or
decree of any court or governmental instrumentality; (ii) conflict with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or obligation to create or impose) any lien upon any of the property or assets
of Consultant pursuant to the terms of, any indenture, mortgage, deed of trust,
credit agreement or loan agreement or any other agreement, contract or
instrument to which the Consultant is a party or by which any of its property or
assets is bound or may be subject; or (iii) violate any provision of the
Certificate of Incorporation or Bylaws (or similar organizational documents) of
Consultant.
7 INVESTMENT REPRESENTATIONS. (a) The Company represents and warrants
that is has provided Consultant access to all information available to the
Company concerning its condition, financial and otherwise, its management, its
business and its prospects. The Company represents that it has provided
Consultant with copies of all of the Company's filings pursuant to the
Securities Act of 1933, as amended (the "1933 Act") and/or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), respectively, and the
regulations promulgated thereunder (collectively, the "Disclosure Documents").
The Company further represents that the Company is current in the filing of the
periodic reports required by the 0000 Xxx. The provisions of this Section 7
shall survive any termination of this Agreement.
(c) Consultant represents and warrants as follows:
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(i) Consultant is an "accredited investor," as
defined in Regulation D ("Regulation D") promulgated under the
Securities Act of 1933, as amended (the "Act")
(ii) Consultant is acquiring the Warrants and Warrant
Shares for its own account, for investment purposes only, and
not with a view to or for the resale, distribution or
fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in the
Warrants or Warrant Shares.
(iii) Consultant has the financial ability to bear
the economic risk of its investment in the Company (including
its possible loss), has adequate means of providing for its
current needs and personal contingencies and has no need, and
anticipates no need in the foreseeable future for liquidity
with respect to its investment in the Company. In addition,
Consultant has sufficient net worth to sustain a loss of its
entire investment should such a loss occur.
(iv) Consultant has such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Warrants and
Warrant Shares.
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8. INDEMNIFICATION. (a) The Company hereby agrees to indemnify
and hold harmless Consultant and its directors, officers, employees and/or
affiliates against any and all losses, claims, damages obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements (and all
actions, suits, proceedings and investigations in respect thereof and any and
all reasonable legal or other costs, expenses and disbursements in giving
testimony or furnishing documents in response to a subpoena or otherwise),
including, without limitation, the reasonable costs, expenses, and
disbursements, as and when incurred, of investigating, preparing, or defending
any such action, proceeding or investigation (whether or not in connection with
litigation to which the Consultant is a party) (collectively, the "Liabilities")
arising out of or in connection with the Consulting Services or the willful
misconduct or gross negligence of the Company, or the violation in any material
respect of applicable federal or state securities laws by the Company with
respect to any untrue statement or alleged untrue statement of a material fact
or any omission or alleged omission to state a material fact required to be
stated, or necessary to make the statements made, in light of the circumstances
under which they were made, not misleading; provided, however, that this
provision shall not apply to any Liabilities to the extent found by a court of
competent jurisdiction to have resulted from the willful misconduct, gross
negligence or violation in any material respect of applicable federal or state
securities laws, of Consultant to the extent set forth in Section 8(b) hereof.
(b) Consultant hereby agrees to indemnify and hold harmless
the Company and its directors, officers, employees and/or affiliates against any
and all Liabilities arising out of or in connection with the violation in any
material respect of applicable federal or state securities laws by Consultant
arising out of or in connection with the Consulting Services hereunder or with
respect to any untrue statement or alleged untrue statement of a material fact
or any omission or alleged omission to state a material fact required to be
stated, or necessary to make the statements made, in light of the circumstances
under which they were made, not misleading, but only if and to the extent that
such untrue statement or alleged untrue statement of a material fact or the
omission was made in reliance upon information furnished in writing by
Consultant specifically for inclusion in any registration statement, prospectus
or any amendment or supplement thereto in connection with any underwritten
public offering involving the Company; provided, however, that this provision
shall not apply to any Liabilities to the extent found by a court of competent
jurisdiction to have resulted from the willful misconduct, gross negligence or
violation in any material respect of applicable federal or state securities
laws, of the Company to the extent set forth in Section 8(a) hereof.
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(c) Each party entitled to indemnification under this
Agreement (the "Indemnified Party"), shall give notice to the party required to
provide indemnification hereunder (the "Indemnifying Party") with reasonable
promptness after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought. Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8. Upon receipt of such
notice, the Indemnifying Party shall conduct the defense of such claim or any
litigation resulting therefrom. The Indemnified Party may, however, participate
in such defense at such Indemnified Party's sole expense. The Indemnified Party
shall furnish such information regarding the claim in question as the
Indemnifying Party may reasonably request in writing in connection with the
defense of any such claim and litigation resulting therefrom.
(d) The provisions of this Section 8 shall survive any
termination of this Agreement.
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9. INDEPENDENT CONTRACTORS. Nothing herein contained shall be construed
to constitute the parties hereto as partners or as joint venturers, or either as
agent of the other, or as employer or employee. Except as otherwise expressly
provided herein, Consultant acknowledges that it is not an officer, director or
agent of the Company, it is not and will not be responsible for any management
decisions on behalf of the Company, and may not commit the Company to any
action. The Company represents that Consultant does not have, through stock
ownership or otherwise, the power to control the Company, nor to exercise any
dominating influence over its management. Consultant understands and
acknowledges that this Agreement shall not create or imply any agency
relationship between the parties, and Consultant will not commit Company in any
manner except when a commitment has been specifically authorized in writing by
the Company. The parties hereto acknowledge that Consultant shall be engaged
solely on an independent contractor basis hereunder.
10. MISCELLANEOUS PROVISIONS.
(a) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflicts of law. Each of the parties hereby irrevocably
consents to the jurisdiction of the courts of the State of New York and agrees
that service of process may be made in any manner acceptable for use in the
courts of the State of New York.
(b) ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding between the parties and merges and supersedes any
prior understandings or agreements, whether written or oral. The provisions of
this Agreement shall be amended or waived only with the written consent of both
parties hereto.
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(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, inure to the benefit of, and shall be enforceable by Consultant and the
Company and their respective successors and permitted assigns.
(d) NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed effective and given upon
actual delivery, if delivered by hand, or one (1) business day after the date
sent by nationally recognized overnight courier service, email or facsimile
transmission, or five (5) business days after the date sent by registered or
certified mail, return receipt requested, postage prepaid, addressed in each
case, to the following addresses:
a. if to the Company, to:
0000 Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
b. if to Consultant, to:
0000 00xx Xxxxxx
Xxxxxxxx Xxx Xxxx 00000
Attention: Xxxxx Winehouse, President
Facsimile: ( 000) 000-0000
(e) ASSIGNABILITY. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or Consultant without the prior written consent
of the other party hereto.
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(f) SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which together shall be deemed to be one and the same
agreement.
(h) SPECIFIC PERFORMANCE. The parties hereby acknowledge and
agree that the Warrants and/or Warrant Shares are unique and not otherwise
available, and that, in addition to any other remedies, Consultant may elect, at
its sole option, to invoke any equitable remedies to enforce delivery of the
Warrants and/or Warrant Shares hereunder. In addition, the parties recognize
that, because of the nature of the subject matter of this Agreement, it would be
impracticable and extremely difficult to determine actual damages in the event
of a breach of this Agreement. Accordingly, if the Company commits a breach of
any of the provisions of this Agreement, then the Consultant shall have the
right to seek and receive a temporary restraining order, injunction or other
equitable remedy, including without limitation, the right to have the provisions
of this Agreement specifically enforced by any court having equity jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
NEW VISUAL ENTERTAINMENT INC.
By:/s/ Xxx Xxxxxxxxxx, Xx.
-----------------------------------------
Xxx Xxxxxxxxxx, Xx., Chief Executive Officer
ADVISOR ASSOCIATES, INC.
By: /s/ Xxxxx Winehouse
-----------------------------------------
Xxxxx Winehouse, President
