EXHIBIT 10.5
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ("Agreement") is made this 18th day
of July 1998, by and between NuVen Advisors, Inc., a Nevada corporation
("Advisor") and Flexweight Corporation, a Kansas corporation (the "Company").
WHEREAS, Advisor and Advisor's Personnel (as defined below) have
experience in evaluating and effecting mergers and acquisitions, supervising
corporate management, and in performing general administrative duties for
publicly-held companies and development stage investment ventures; and
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in its development on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. Engagement
The Company hereby retains Advisor, retroactive to April 1, 1998, the
date Advisor first began providing the services (the "Effective Date")
and continuing until termination as provided herein, to assist the
Company in it's effecting the purchase of businesses and assets
relative to its business and growth strategy (the "Services"). The
Services are to be provided on a "best efforts" basis directly and
through Advisor's officers or others employed or retained and under
the direction of Advisor ("Advisor's Personnel"); provided, however,
that the Services shall expressly exclude all legal advice, accounting
services or other services which require licenses or certification
which Advisor may not have.
2. Term
This Agreement shall have an initial term of one (1) year (the
"Primary Term"), commencing with the Effective Date. At the conclusion
of the Primary Term this Agreement will automatically be extended on an
annual basis (the "Extension Period") unless Advisor or the Company
shall serve written notice on the other party terminating the
Agreement. Any notice to terminate given hereunder shall be in writing
and shall be delivered at least thirty (30) days prior to the end of
the Primary Term or any subsequent Extension Period.
3. Time and Effort of Advisor
Advisor shall allocate time and Advisors Personnel as it deems
necessary to provide 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 performed
for the Company shall be conclusive evidence that the Services have
been performed. Additionally, in the absence of willful misfeasance,
bad faith, negligence or reckless disregard for the obligations or
duties hereunder by Advisor, neither Advisor nor Advisor's Personnel
shall be liable to the Company or any of its any shareholders for any
act or omission in the course of or connected with rendering the
Services, including but not limited to losses that may be sustained
in any corporate act in any subsequent Business Opportunity (as defined
herein) undertaken by the Company as a result of advice provided by
Advisor or Advisor's Personnel.
4. Compensation
The Company agrees to pay Advisor a fee for the Services (the "Initial
Fee") by way of the issuance by the Company of Forty Thousand (40,000)
shares of the Company's common stock following the Company's closing on
the purchase of the initial Business Opportunity (as defined below),
and a monthly fee ("Advisory Fee") equal to Three Thousand Dollars
(USD $3,000), payable monthly in cash or shares of the Company's
common stock, at the Company's election.
As incentive to execute this Agreement, the Company hereby grants to
Advisor an option to purchase Three Hundred Fifty Thousand (350,000)
shares of the Company's common stock ("Option Shares") exercisable at a
price of $6.00 per share, which is approximately 110% of the 10-day
moving average closing bid price for such shares at July 15, 1998.
Advisory's right to purchase such Option Shares shall be governed by
the terms and conditions of the Option Agreement attached hereto as
Exhibit "A" and incorporated herein by reference (the "Option"). The
right of Advisor to exercise such Option will vest to Advisor upon
execution hereof.
5. Other Services
If, following the Closing by the Company of the first Business
Opportunity, the Company enters into a merger or exchange securities
with, or purchases the assets or enters into a joint venture with, or
makes an investment in a company introduced by Advisor (a "Business
Opportunity"), the Company agrees to pay Advisor a fee equal to five
percent (5%) of the value of each Business Opportunity introduced by
Advisor and acquired or otherwise participated in by the Company
(collectively referred to herein, in each instance, as the "Transaction
Fee"), which shall be payable immediately following the closing of each
such transaction, in cash or in shares of the Company's common stock.
The Company and Advisor acknowledge that in the event Advisor, as a
result of this Agreement, receives shares of the Company's common
stock it may be considered an affiliate subject to Section 16(b) of the
Securities Exchange Act of 1934 (the "'34 Act"). In this regard the
Company and Advisor agree, that for purposes of any "profit"
computation under Section 16(b) of the '34 Act, the price paid for such
shares is equal to the Initial Fee, the Advisory Fee or the Transaction
Fee, as the case may be.
6. Registration of Shares
No later than ten (10) days following the date hereof as to shares
issued to satisfy the Advisory Fee (if paid in shares), the Option
Shares and, as to an event giving use to the Company's obligation to
pay a Transaction Fee, such shares shall be registered by the Company
with the Securities and Exchange Commission under a Form S-8 or other
applicable registration statement, and the Company shall cause such
registration statement to be remain effective until the earlier of the
first anniversary of the issuance of the most recently issued shares,
or the sale of all such shares by Advisor, whichever is the earlier
date. At Advisor's election, such shares may be issued prior to
registration in reliance on exemptions from registration provided by
Section 4(2) of the Securities Act of 1933 (the "'33 Act"), Regulation
D of the '33 Act, and applicable state securities laws. Such issuance
or reservation of shares shall be in reliance on representations and
warranties of Advisor set forth herein. Failing to register such
shares, or maintain the effectiveness of the applicable registration
statement, the Company shall satisfy any Initial Fee, Transaction Fee
or Advisory Fee in cash within ten (10) days of receipt of Advisor's
statement setting out the amount and type of fee then due and payable.
7. Costs and Expenses
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services shall be paid by the Company, or Advisor
shall be reimbursed if paid by Advisor on behalf of the Company, within
ten (10) days of receipt of written notice by Advisor, provided that
the Company must approve in advance all such expenses in excess of $500
per month.
8. Place of Services
The Services provided by Advisor or Advisor's Personnel hereunder will
be performed at Advisor's offices except as otherwise mutually agreed
by Advisor and the Company.
9. Independent Contractor
Advisor and Advisor's Personnel will act as an independent contractor
in the performance of its duties under this Agreement. Accordingly,
Advisor will be responsible for payment of all federal, state, and
local taxes on compensation paid under this Agreement, including income
and social security taxes, unemployment insurance, and any other taxes
due relative to Advisor's Personnel, and any and all business license
fees as may be required. This Agreement neither expressly nor
impliedly creates a relationship of principal and agent, or employee
and employer, between Advisor's Personnel and the Company. Neither
Advisor nor Advisor's Personnel are authorized to enter into any
agreements on behalf of the Company. The Company expressly retains the
right to approve, in its sole discretion, each Business Opportunity
introduced by Advisor, and to make all final decisions with respect to
effecting a transaction on any Business Opportunity.
10. Rejected Business Opportunity
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, participate or invest in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such transaction, such Business Opportunity shall revert back
to and become proprietary to Advisor, and Advisor shall be entitled to
acquire or broker the sale or investment in such rejected Business
Opportunity for its own account, or submit such assets or Business
Opportunity elsewhere. In such event, Advisor shall be entitled to any
and all profits or fees resulting from Advisor's purchase, referral or
placement of any such rejected Business Opportunity, or the Company's
subsequent purchase or financing with such Business Opportunity in
circumvention of Advisor.
11. No Agency Express or Implied
This Agreement neither expressly nor impliedly creates a relationship
of principal and agent between the Company and Advisor, or employee and
employer as between Advisor's Personnel and the Company.
12. Termination
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice
with mutual written consent. Failing to have mutual consent, without
prejudice to any other remedy to which the terminating party may 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 Period, 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; or,
(ii) If Advisor willfully breaches or neglects the duties
required to be performed hereunder; or,
(B) By Advisor.
(i) If the Company breaches this Agreement or fails to make
any payments or provide information required hereunder;
or,
(ii) If the Company ceases business or, other than in the
Initial Merger, sells a controlling interest to a third
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
corporation, entity or individual outside of the scope
of this Agreement; or,
(iii) If the Company has a receiver appointed for its business
or assets, or otherwise becomes insolvent or unable to
timely satisfy its obligations in the ordinary course of
business, including but not limited to the obligation to
pay the Initial Fee, the Transaction Fee, or the
Advisory Fee; or,
(iv) If the Company institutes, makes a general assignment
for the benefit of 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 Company to Advisor are determined to be
materially false or misleading.
In the event Advisor elects to terminate without cause or this
Agreement is terminated prior to the expiration of the Primary Term or
any Extension Period by mutual written agreement, or by the Company for
the reasons set forth in A(i) and (ii) above, the Company shall only be
responsible to pay Advisor for unreimbursed expenses, Advisory Fee and
Transaction Fee accrued up to and including the effective date of
termination. If this Agreement is terminated by the Company for any
other reason, or by Advisor for reasons set forth in B(i) through (v)
above, Advisor shall be entitled to any outstanding unpaid portion of
reimbursable expenses, Transaction Fee, if any, and the balance of the
Advisory Fee for the remainder of the unexpired portion of the
applicable term (Primary Term or Extension Period) of the Agreement.
13. Indemnification
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses asserted against or imposed or incurred by
either party by reason of or resulting from any action or a breach of
any representation, warranty, covenant, condition, or agreement of the
other party to this Agreement.
14. Remedies
Advisor and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and non-exclusive and shall
be in addition to any other remedy to which the parties may be
entitled.
15. Miscellaneous
(A) Subsequent Events. Advisor and the Company each agree to notify
the other party if, subsequent to the date of this Agreement,
either party 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 in any manner only by an instrument in writing executed
by the parties hereto.
(C) Further Actions and Assurances. At any time and from time to
time, each party agrees, at its or their expense, to take
actions and to execute and deliver documents a may be reasonably
necessary to effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply
with any of its obligations, agreements, or conditions hereunder
may be waived in writing by the party to whom such compliance is
owed. The failure of any party to this Agreement to enforce at
any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision or a waiver of
the right of such party thereafter to enforce each and 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
subsequent breach or non-compliance.
(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written
consent of the other.
(F) Notices. Any notice or other communication required or
permitted by this Agreement must be in writing and shall be
deemed to be properly given when delivered in person to an
officer of the other party, when deposited in the United States
mails for transmittal by certified or registered mail, postage
prepaid, or when deposited with a public telegraph company for
transmittal, or when sent by facsimile transmission charges
prepared, provided that the communication is addressed:
(i) In the case of the Company:
Flexweight Corporation
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to:
Xxxxxx Consulting Group
000 Xxxx 000 Xxxxx, xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
(ii) In the case of Advisor:
NuVen Advisors, Inc.
0000 Xx. Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
With copy to:
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 are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(H) Governing Law. This Agreement was negotiated and is being
contracted for in Nevada, and shall be governed by the laws of
the Nevada, notwithstanding any conflict-of-law provision to
the contrary.
(I) Binding Effect. This Agreement shall be binding upon the
parties hereto 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 between the parties hereto and supersedes any and
all prior agreements, arrangements, or understandings between
the parties relating to the subject matter of this Agreement.
No oral understandings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express
or implied, other than as set forth herein, have been made by
any party.
(K) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in
full force and effect.
(L) Counterparts. A facsimile, telecopy, or other reproduction of
this Agreement 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 same
instrument, by one or more parties hereto and such executed
copy may be delivered by facsimile of similar instantaneous
electronic transmission device pursuant to which the signature
of or on behalf of such party can be seen. In this event,
such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this
Agreement 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 of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date above written.
"Advisor"
NUVEN ADVISORS, INC.
a Nevada corporation
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: President
The "Company"
Flexweight Corporation
a Kansas corporation
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President/CEO
