Exhibit (10)(v)
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"') is effective as of February
____, 2000, by and between Area Investment and Development Co., Inc., a Utah
corporation (the "Company"), and Xxxxxxx Xxxxxxx (the "Consultant').
The Company desires to retain the Consultant to use Consultant's best
efforts to explore, introduce and negotiate with third parties for certain
corporate sponsorships, financing and disposition of rights, and the Consultant
agrees to such engagement upon the terms set forth below.
1. Duties, Involvement and Scope of Service.
A. The Company hereby engages Consultant, as an independent contractor and
not as an employee, to use Consultant's best efforts to explore, introduce
and/or negotiate with third parties for: (i) corporate sponsorships; (ii)
financing; (iii) disposition of television and audio/music rights; and, (iv)
licensing and merchandising of the Company's products and services.
Additionally, the Company engages Consultant to perform such other reasonably
related services, as reasonably requested by the Company (collectively, the
"Services").
B. Consultant acknowledges that any and all arrangements or agreements that
Consultant may negotiate for the Company, shall be subject to acceptance by the
Board of Directors of the Company and which shall be evidenced by execution by
an authorized officer for the Company.
C. The Consultant shall devote such time and effort to the duties hereunder
and shall use its best efforts to fulfill obligations hereunder; however, the
Company acknowledges that the Consultant is engaged in other business activities
and that such activities will continue during the term of this Agreement.
2. Term/Duration/Termination.
Except as otherwise provided hereunder, this Agreement shall remain in full
force and effect for one year (1) from the date hereof Following the completion
of such initial term, this Agreement shall continue in effect from year-to-year
thereafter unless one party shall provide The other party written notice of its
intent to terminate the Agreement no less than sixty (60) days prior to the end
of the annual period. Expiration/Termination of the Agreement shall not affect
the right of the Consultant to receive Success Fees (as that term is defined in
paragraph 3(B) below) subject to the Terms of this Agreement.
3. Compensation.
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A. Annual Retainer Fee. The Company agrees to compensate Consultant a sum
of Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Consulting Fee"), for
the Services. Payment of the Consulting Fee shall be made pursuant to the
following schedule:
a. Ten Thousand Dollars ($10,000.00) per calender month during the term
of this Agreement, and,
b. The balance of One Hundred Thirty Thousand Dollars ($130,000.00)
payable on the one year anniversary of this Agreement.
Consultant and Company agree that the above mentioned schedule may be
modified upon written consent by both parties. Notwithstanding the above, it is
the Company's intention that payments of the Consulting Fee may be spread more
evenly on a monthly basis in the event the Company determines that cash flow is
sufficient to do so.
B. Success Fees. Notwithstanding the termination of this Agreement in
accordance with paragraph 2 above, and subject to the provisions of paragraph 8
below, Consultant shall receive a "Success Fee" which shall be defined as 10% of
all monies paid to Company pursuant to all agreements with any third party which
Consultant: (i) first introduced to the Company; (ii) initiated negotiations;
and/or, (iii) assisted to finalize and execute, provided however that all such
third party agreements is first approved and ratified by disinterested directors
of the Board of Directors, pursuant to the Company's Articles of Incorporation,
By-Laws and the General Corporation Law of Utah.
The Success Fee shall continue to be payable in respect of: (i) all monies
paid to Company from all agreements executed during the term of this Agreement
with any third party which Consultant first introduced to the Company, initiated
negotiations, and/or assisted to finalize and execute; (ii) all monies paid to
Company from all renewed agreements with any third party who was first
introduced to the Company by the Consultant during the term of this Agreement,
and who was previously under contract with the Company during the term of this
Agreement; (iii) all monies paid to the Company from all agreements with any
third party who Consultant first introduced to the Company during the term of
this Agreement, and which agreements are finalized and executed on the date of
termination of this Agreement, or prior to the one year anniversary date of such
termination; and (iv) all monies paid to Company from all renewed agreements
with any third party who was first introduced to the Company by the Consultant
during the term of this Agreement) and whose initial agreement with the Company
was finalized and executed on the date of termination of this Agreement, or
prior to the one year anniversary date of such termination.
In any fiscal year that a Success Fee is owed to Consultant, the Company
shall furnish Consultant with an Officer's Certificate, setting forth an
itemized calculation as to the payment of the Success Fee and setting forth
certain representations as to the status of all agreements, contemplated in tile
preceding paragraph, between the Company and all third parties introduced to
tile Company by the Consultant.
C. Equity Interest. 100,000 shares of common stock (the "Equity Interest")
shall be issued
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to Consultant, or its designees, at a nominal rate; provided. however, that the
Equity Interest Shall be issued pursuant to the following schedule:
NUMBER OF SHARES DATE OF ISSUANCE
---------------- ----------------
25,000 90 days from the date of this agreement
25,000 180 days from the date of this agreement
25,000 270 days from the date of this agreement
25,000 360 days from the date of this agreement
Consultant acknowledges that the issuance of the Equity Interest is subject
to Consultant substantially performing the Services, in accordance with the
terms of this Agreement. Prior to tile issuance of Equity Interests pursuant to
the schedule above, a determination will be made by the Board of Directors on
the business day immediately preceding the scheduled date of issuance of shares
of common stock, that such Services has been substantially performed.
Consultant further acknowledges and understands that the above mentioned
shares of common stock comprising the Equity Interest shall be issued pursuant
to an exemption from registration requirements under Federal Securities Laws and
are considered "Restricted Stock" under the Securities Act of 1933, as amended.
D. Options. The Company agrees to grant Consultant an option to purchase
150,000 shares of common stock (the "Option"), at an exercise price of $3.00 per
share of common stock, until December 31, 2002, and further subject to the terms
and conditions of a 1999 Stock Option Plan (the "Plan") to be approved by the
shareholders of tile Company and ratified by the Board of Directors, as soon as
practicable. Such Plan shall be in compliance with the Company's Articles of
Incorporation, Bylaws and the General Corporation Law of Utah. The Consultant
further acknowledges and agrees that the terms of the Option shall be subject to
the Plan, and in the event of a conflict between the terms and conditions of the
Plan and the terms of the Option granted herein, the terms and conditions of the
Plan shall prevail.
4. Taxes and other Liabilities.
Consultant acknowledges and agrees that it is an independent contractor and
not an employee of the Company. As such, Consultant acknowledges that it is
responsible for all employment and other tax payable to any federal, state or
local authority and any other obligation or liabilities arising from its
engagement and compensation hereunder.
5. Appointment as Chairman of the Board of Directors.
Upon the execution of this Agreement the Company shall appoint Consultant
as a director and the Chairman of the Board of Directors of the Company until
his respective successor is elected, his respective resignation or his
respective removal before the expiration of his term. Such appointment shall be
subject to the Company's Articles of Incorporation, By-Laws and the General
Corporation Laws of Utah.
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6. Notice.
All notices to the Company or the Consultant permitted to be required hereunder
shall be in writing and shall be delivered personally, by telecopier or by
courier service providing for next-day delivery or sent by registered or
certified mail return receipt requested, to the following address:
The Company: Area Investment and Development Co.
C/x Xxxxxxx, Xxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
The Consultant Xxxxxxx Xxxxxxx
000 X. Xx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Either party may change the address to which notices shall be sent by
sending written notice of such change of address to the other party. Any such
notice shall be deemed given if delivered personally upon receipt; if
telecopied, when telecopied; if sent by courier service; and if sent by
certified or registered mail, three (3) days after deposit (postage prepared)
with the U.S. Postal Service.
7. Representations and Warranties; Indemnification.
The Company and Consultant each represent and warrant to the other that it
has all rights to enter into this Agreement and that its execution of the
Agreement shall not infringe upon the rights of any third party. The Company and
Consultant each agree to indemnify the other and hold the other completely
harmless from any claims made by any third party against the other relating to,
or arising from, any breach of this Agreement or obligations arising herefrom.
In addition, the Company agrees to indemnify Consultant and hold Consultant
harmless from any third party claims made against Consultant as a shareholder of
the Company, relating to any failure of the Company to comply with its corporate
obligations, including, but not limited to the Company's failure to pay any
debts owed to creditors; provided, however, that at any time the Consultant
shall become a "controlling person" as the term is defined or used in the
Securities Act of 1933, as amended, the aforementioned indemnification shall not
be applicable; and provided further, however, that this indemnification shall
not be applicable for any claims arising from, or a result of Consultant's
capacity as a director of the Company. Consultant acknowledges that any
indemnification provided to Consultant, in his capacity as a director of the
Company, shall solely be pursuant to the terms of the Company's Articles of
Incorporation, By4aws and the General Corporation Laws of Utah, and not from
this Agreement.
8. Delegation.
The Company and the Consultant agree that Consultant shall be entitled to
delegate all or any part or parts of his duties and obligations hereunder to any
person, firm or corporation (collectively,
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the "designees" and individually, "designee") approved by the Company in writing
(which consent shall not be unreasonably withheld)) whether or not such designee
is subject to an existing contract with the Company for similar services. Any
such delegation may be on such terms and conditions as the Consultant may deem
appropriate; provided, however, that should the Consultant make the initial
delegation or request for assistance from a designee, the Consultant shall
remain liable to perform his duties and obligations, and shall indemnify the
Company from any liability for any finder's fees, agent's commissions or other
similar forms of compensation in Connection with this Agreement or the
transactions contemplated hereby, notwithstanding the fact that such designee
may be subject to an existing contract with the Company for similar services
9. Governing Law.
Notwithstanding the place where this Agreement may be executed by any of the
parties hereto, the parties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and governed by the laws of the
State of New York, without giving effect to conflict of laws principles thereof.
10. Entire Agreement.
This Agreement contains the entire agreement between Consultant and Company
and correctly sets forth the rights and duties of each of the parties to each
other concerning such matters as of this date. Any agreement or representation
concerning the subject matter of this Agreement or the duties of Consultant not
set forth in this Agreement is null and void.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
CONSULTANT: COMPANY:
Area Investment and Development Co.
By: /s/ Xxxxxxx Xxxxxxx
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By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: President
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