MANAGEMENT AGREEMENT
THIS
MANAGEMENT AGREEMENT (“Agreement”) is
dated
January 31, 2008 (“Effective Date”) by and between UNIVERSAL
CAPITAL MANAGEMENT, INC.,
a
Delaware corporation (“Manager”),
and
VYSTAR
CORPORATION,
a
Georgia corporation (“VYSTAR”
or “Company”).
BACKGROUND
VYSTAR
desires to obtain from the Manager, and the Manager is willing and able to
provide to VYSTAR, management services and other assistance in accordance with
and subject to the terms and conditions set forth in this
Agreement.
For
and
in consideration of the mutual benefits and covenants set forth below, and
other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. Appointment
as Manager.
(a) VYSTAR
hereby engages Manager to provide management services and other assistance
in
accordance with the terms of this Agreement. The Manager shall and hereby agrees
to devote such time as is reasonably necessary to provide such services and
assistance.
2. Scope
of Services.
(a) Manager
hereby agrees to provide to VYSTAR the following services (as amended from
time
to time, collectively, the “Services”):
(i) Strategic
Planning.
Manager
shall assist VYSTAR management in the strategic planning process to include
but
not be limited to analysis of potential markets, competition, product marketing
approaches, pricing and future product utility.
(ii) Investment
Banking Consultation and Investor Introduction Services.
Manager
is not registered at this time as a securities broker or dealer, and represents
and warrants that such registration is not required. Manager further represents
that it does not have an affiliation with any securities brokerage firm. As
a
result, the Company understands that, while the Manager will introduce the
Company to qualified persons and/or institutions who indicate a serious interest
in pursuing a possible financing transaction for the Company within the
parameters established by the Company, the Manager will not be involved in
conducting negotiations for the Company with any such persons, handling any
funds or securities, or performing services that would constitute a business
of
effecting transactions in securities under applicable federal or state law.
Manager further represents and warrants that it has not acted as a broker or
finder in any other sale of securities and does not intend to participate in
any
distribution of securities after any transaction under this
Agreement.
Manager
will use its best efforts to assist VYSTAR in seeking and raising funding and
in
preparation for entering the public market, pursuant to the Manager letter
attached hereto as Exhibit A. Manager will provide VYSTAR with various options
and methods for attaining its investment banking and public market
goals.
(iii) Investor
Relations Services. Manager
will introduce VYSTAR to qualified Investor Relations Manager(s) suitable for
providing marketing and public relations services in the investor community
on
behalf of VYSTAR. At VYSTAR’S request, the Manager will co-ordinate investor
relations and public relations services between VYSTAR the provider of such
services.
3. Term
and Termination.
(a) This
Agreement shall be effective as of the Effective Date and, subject to the
provisions of section (b) of this Section 3, shall terminate after three (3)
months (the “Term”).
(b) Notwithstanding
the provisions of subsection (a) of this Section 3, (i) Manager can terminate
this Agreement at any time upon thirty (30) days’ notice to VYSTAR upon VYSTAR’s
failure to pay the amounts required hereunder, and (ii) VYSTAR can terminate
this Agreement after thirty (30) days’ notice to Manager of Manager’s material
failure to fulfill its obligations hereunder and Manager’s failure to correct
such failure during such time period.
4. Compensation.
Within
thirty (30) days of the signing of this agreement VYSTAR shall pay Manager
for
the Services by delivering to Manager a Warrant attached hereto as Exhibit
A,
pursuant to a Warrant Purchase Agreement attached hereto as Exhibit B, to
purchase up to One Million (1,000,000) Shares of the common stock of the Company
at an exercise price of $0.01. The Warrant will be exercisable in whole or
in
part at or before 5:00 p.m. E.S.T. on January 31, 2013.
In
addition, VYSTAR shall reimburse Manager for third party and out-of-pocket
expenses actually and reasonably incurred by Manager as an adjunct to and as
a
supplement to Manager’s responsibility for performing the Services for which
Manager is being paid compensation described herein, and which are approved
in
advance by VYSTAR; provided that expenses of Affiliates of Manager shall not
be
deemed third party expenses for purposes of this Section 4.
5. Non-Exclusive
Contract.
The
Manager acts as adviser to other clients and may give advice, and take action,
with respect to any such client which may differ from the advice given, or
the
timing or nature of action taken, with respect to VYSTAR.
6. Delegation
and Assignment.
With
VYSTAR’s prior written consent, which consent shall not be unreasonably withheld
or delayed, Manager may delegate all or part of its duties to perform Services
hereunder; provided, that Manager’ costs associated with any duties so delegated
shall not be deemed out-of-pocket expenses added to the price of Services
pursuant to Section 4. Notwithstanding the foregoing, Manager shall be entitled
to delegate all or any part of its duties to one or more of its Affiliates
upon
notice to VYSTAR; provided, however, that Manager and its designee Affiliate(s)
shall be jointly and severally liable for performance of Manager’s obligations
under this Agreement. VYSTAR shall not assign or subcontract its rights, duties,
or obligations under this Agreement.
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7. Confidential
Information; Ownership.
(a) Each
party shall treat as confidential all Confidential Information of the other
party that comes to its knowledge through this Agreement. Each party shall
take
such steps to prevent disclosure of such Confidential Information to any third
person as it would take in protecting its own proprietary or confidential
information and shall not use any portion of such Confidential Information
for
any purpose not authorized herein. All Confidential Information of each party
and any information containing a party’s Confidential Information shall at all
times remain the exclusive property of that party.
(b) No
party
shall be under any obligations with respect to any Confidential
Information:
(i) which
is,
at the time of disclosure, available to the general public;
(ii) which
becomes at a later date available to the general public through no fault on
the
part of such party and then only after such later date;
(iii) which
such party can demonstrate was in its possession before receipt from the other
party; or
(iv) which
is
disclosed to such party without restriction on disclosure by a third party
who
has the lawful right to disclose such information.
(c) The
confidentiality obligations of this Section 7 shall survive the termination
of
this Agreement.
8. Independent
Contractor.
Manager
is and shall remain at all times an independent contractor of VYSTAR in the
performance of all Services hereunder, and all persons employed by Manager
to
perform such Services shall be and remain employees solely of Manager and
subject only to the supervision of Manager’s supervisory personnel. With respect
to Manager’s employees providing services under this Agreement, Manager shall be
responsible for the payment of all salaries and benefits and all income taxes,
social security taxes, employment compensation taxes and other employment taxes
and withholdings with respect to such employees and all fringe benefits program
expenses, such as insurance costs, pension or retirement plans, vacation, sick
leave and similar matters, with respect to such employees. Manager shall be
entitled to determine which of its employees shall provide the
Services.
9. Force
Majeure.
(a) Neither
party shall be liable for any loss or damage for delay or non-performance under
this Agreement resulting from the operation of any applicable law, rule,
ordinance or regulation of any governmental entity or regulatory agency, or
from
any requirement or intervention of civil, naval or military authorities or
other
agencies of the government, or by reason of any other causes whatsoever not
reasonably within the control of such party, including, but not limited to,
acts
of God, war, riot, insurrection, civil violence or disobedience, blockages,
embargoes, sabotage, epidemics, fire, strikes, lock-outs or other industrial
or
labor disturbances, lightning, hurricanes, cyclonic storms, explosions and
delay
of carriers; provided, that the affected party notifies the other party promptly
of the occurrence of the cause and thereafter exerts reasonable commercial
efforts to overcome the cause of prevention and hindrance and to resume
performance; and provided, further, that the settlement of strikes, lock-outs
and other industrial or labor disturbances shall be entirely within the
discretion of the affected party, and the affected party shall not be required
to make settlement of strikes, lock-outs and other industrial or labor
disturbances by acceding to the demands of any opposing third party or parties
when such course is unfavorable in the affected party’s judgment.
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(b) If
Manager’s performance under this Agreement is suspended or rendered impractical
by reason of any cause covered by subsection (a) of this Section 9
(“Force
Majeure”)
for a
period in excess of twenty (20) days, VYSTAR shall have either the right
to terminate this Agreement with respect to the disrupted Services immediately
upon written notice to Manager or require that the Agreement continue in force
for that period of time beyond the Term that such Force Majeure condition
existed during the Term without incurring any obligation by VYSTAR for
additional payment for Services by Manager. An event of Force Majeure shall
not
otherwise limit amounts payable for Services rendered on or prior to the actual
date of the event of Force Majeure.
10. Limitation
of Liability.
Notwithstanding any other provision of this Agreement to the contrary, Manager
shall not be liable to VYSTAR by reason of any error of omission or commission,
performance or failure to perform or delay in performing any Services under
this
Agreement, for special, incidental or consequential damages, suffered by VYSTAR
beyond a refund to VYSTAR of all charges paid and/or shares issued by VYSTAR
to
Manager for the Services that caused such damages, unless Manager shall have
committed gross negligence or willful misconduct. The provisions of this Section
10 shall survive termination of this Agreement.
11. Manager’s
Investment Representations.
Manager
hereby represents and warrants to and with VYSTAR that:
(a) Manager
will be acquiring the Shares for its own account as principal and not with
a
view to, or for sale in connection with, any distribution of all or any of
such
Shares. Manager hereby agrees that it will not, directly or indirectly, assign,
transfer, offer, sell, pledge, hypothecate or otherwise dispose of all or any
of
such Shares (or solicit any offers to buy, purchase or otherwise acquire or
take
a pledge of any of such Shares) except in accordance with the registration
provisions of the Securities Act of 1933 (the “Securities Act”) or an exemption
from such registration provisions or any applicable securities laws.
(b) Manager
(i) is knowledgeable and experienced with respect to the financial, tax and
business aspects of the ownership of investments such as the Shares and of
the
business contemplated by VYSTAR and is capable of evaluating the risks and
merits of acquiring the Shares and in making a decision to proceed with this
investment, has not relied on any representations, warranties or agreements
of
VYSTAR or others, and (ii) can bear the economic risk of an investment in Shares
for an indefinite period of time and can afford to suffer the complete loss
thereof.
(c) Manager
has evaluated the risks involved in investing in the Shares and has determined
that the Shares are a suitable investment for Manager. Specifically, the
aggregate amount of the investments the Manager has in, and Manager’s
commitments to, all similar investments that are illiquid is reasonable in
relation to Manager’s net worth, both before and after the acquisition of the
Shares pursuant to this Agreement.
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(d) Manager
understands and acknowledges that the Shares have not been registered under
the
Securities Act or any state securities laws and are being offered and sold
in
reliance on exemptions provided in the Securities Act and state securities
laws
for transactions not involving any public offering and, therefore, cannot be
resold or transferred unless they are subsequently registered under the
Securities Act and such applicable state securities laws or unless an exemption
from such registration is available. Manager also understands that VYSTAR does
not have any obligation or intention to register the Shares for sale under
the
Securities Act or any state securities laws or of supplying the information
which may be necessary to enable the Manager to sell Shares and that Manager
has
no right to require the registration of the Shares under the Securities Act,
any
state securities laws or other applicable securities regulations.
(e) Manager
has no contract, understanding, agreement or arrangement with any person to
sell, transfer or pledge to such person or anyone else any of the Shares which
the Manager will acquire pursuant to this Agreement and that Manager has no
present plans to enter into any such contract, undertaking, agreement or
arrangement.
12. Definitions.
(a) “Affiliate”
means, with respect to a Person, another Person who controls, is controlled
by
or is under common control with the first such Person.
(b) “Confidential
Information” means any and all information of either party that might reasonably
be considered confidential, secret, sensitive, proprietary or private. To the
extent practical, Confidential Information shall be marked “proprietary” or
“confidential.” Confidential Information shall include the
following:
(i) data,
know-how, formulae, processes, designs, sketches, photographs, plans, drawings,
specifications, samples, reports, lists, financial information, studies,
findings, inventions and ideas, computer programs and software, or proprietary
information relating to either party or the methods or techniques used by either
party;
(ii) data,
documents or proprietary information employed in connection with the marketing
and implementation of each party’s products, including cost information,
business policies and procedures, revenues and markets, distributor and customer
lists, and similar items of information; and
(iii) any
other
data or information obtained by either party during the term of this Agreement
which is not generally known to and not readily ascertainable by proper means
by
third persons who could obtain economic value from its use or
disclosure.
(c) “Control”
means the ability, through stock ownership, contract, or otherwise, to control
the business or officers of a Person.
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(d) “Damages
and Expenses” means costs, liabilities, and expenses incurred in investigating,
defending, and paying settlements or judgments with respect to claims (including
reasonable attorneys’ fees).
(e) “Holiday”
means for purposes of this Agreement, a day, other than a Saturday or Sunday,
on
which national banks with branches in the Commonwealth of Pennsylvania are
or
may elect to be closed.
(f) “Person”
means an individual or entity.
(g) “Shares”
means shares of common stock of VYSTAR, par value $.0001 dollars per share
acquired by Manager pursuant to this Agreement.
13. Miscellaneous.
(a) Indulgences,
Etc.
Neither
the failure nor any delay on the part of either party to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power
or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver
of
such right, remedy, power or privilege with respect to any other occurrence.
No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
(b) Controlling
Law.
This
Agreement and all questions relating to its validity, interpretation,
performance and enforcement (including, without limitation, provisions
concerning limitations of actions), shall be governed by and construed in
accordance with the laws of the State of Delaware, notwithstanding any
conflict-of-laws doctrines of any jurisdiction to the contrary, and without
the
aid of any canon, custom or rule of law requiring construction against the
draftsman.
(c) Notices.
All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received only when delivered (personally, by courier service such
FedEx
or by other messenger) against receipt or upon actual receipt of registered
or
certified mail, postage prepaid, return receipt requested, addressed as set
forth below:
| If to: |
Manager
Universal
Capital Management, Inc.
0000
Xxxxxx Xxxxx, Xxxxx 00
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X.
Xxxxx
|
| If to: |
VYSTAR CORPORATION
0000
Xxxxxxxxx Xxxx.
Xxxxxxxx
000, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxx
|
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In
addition, notice by mail shall be sent by a reputable international courier
(such as FedEx) if posted outside of the continental United States. Any party
may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this
subparagraph for the giving of notice.
(d) Binding
Nature of Agreement; No Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
(e) Provisions
Separable.
The
provisions of this Agreement are independent of and separable from each other,
and no provision shall be affected or rendered invalid or unenforceable by
virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part.
(f) Entire
Agreement.
This
Agreement contains the entire understanding among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of
the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
(g) Section
Headings.
The
Section and subsection headings in this Agreement have been inserted for
convenience of reference only; they form no part of this Agreement and shall
not
affect its interpretation.
(h) Gender,
Etc.
Words
used herein, regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context indicates is
appropriate.
(i) Number
of Days.
In
computing the number of days for purposes of this Agreement, all days shall
be
counted, including Saturdays, Sundays and Holidays; provided, however, that
if
the final day of any time period falls on a Saturday, Sunday or Holiday, then
the final day shall be deemed to be the next day which is not a Saturday, Sunday
or Holiday.
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IN
WITNESS WHEREOF,
the
Parties hereto have executed this Management Agreement
|
VYSTAR
Corporation
|
Universal
Capital Management, Inc.
|
|
|
|
|
|
|
|
By:
_______________________________
|
By:
____________________________
|
|
Name:
Xxxxxxx X. Xxxxx
|
Name:
Xxxxxx X. Xxxxxxx
|
|
Title:
President and COO
|
Title:
Vice President and CFO
|
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