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EXHIBIT 10A
ADVISORY AGREEMENT WITH XXXX X. XXXX
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ("Agreement") is made this 12th day of August
1998, by and between NuVen Advisors, Inc., a Nevada corporation ("Advisor") and
Scientific NRG, Incorporated, a Minnesota corporation (the "Company").
WHEREAS, Advisor and Advisor=s Personnel (as defined below) have in
excess of 25 years of 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 acquiring or merging with a new line of business or company 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, effective the date hereof and
continuing until termination, as provided herein, to assist the Company
in it's formulation of growth and financing strategies (the "Services")
including but not limited to effecting merger of the Company into or the
acquisition of a privately-held company (the ?Initial Merger"). 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.
The Company expressly retains the right to approve, in its sole
discretion, the Initial Merger and each Business Opportunity (as defined
below) introduced by Advisor, and to make all final decisions with
respect to effecting a transaction on the Initial Merger or any Business
Opportunity.
2. TERM
This Agreement shall have an initial term of one (1) year (the "Primary
Term"). 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.
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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 the
Initial Merger, or in any subsequent merger, asset purchase or sale of
assets by the Company, or financing transaction where the Company
provides capital for an interest or rights for a particular business
venture, or any investment undertaken by the Company as a result of
advice provided by Advisor or Advisor=s Personnel (collectively a
"Business Opportunity").
4. COMPENSATION
If, as a result of providing the Services or otherwise, Advisor is
successful effecting the Initial Merger, the Company agrees to pay
Advisor a fee equal to ten percent (10%) of the capitalization (the
"Introduction Fee Shares") of the Company at the closing of the Initial
Merger.
Additionally, following the Initial Merger, if Advisor is successful in
introducing a subsequent Business Opportunity introduced by Advisor
which is acquired in whole or in part, by purchase, merger, or
otherwise, the Company agrees to pay Advisor a fee equal to five percent
(5%) of the value of each Business Opportunity. The fee for the
introduction of each Business Opportunity shall be referred to herein,
in each instance, as the ?Transaction Fee", and such fee shall be
payable upon the closing date each such transaction.
As incentive to execute this Agreement, the Company will cause the grant
to Advisor of an option to purchase shares of common stock of the
Company: The option (the "Option") shall grant Advisor the right to
acquire common stock equal to four and nine-tenths percent (4.9%) of the
shares outstanding of the Company immediately following the Initial
Merger (the "Option Shares") exercisable at a price of one hundred ten
percent (110%) of the 10-day moving average closing bid price per share
of such common stock on the date hereof (the "Exercise Price"). The
right of Advisor to exercise such Option will vest to Advisor upon
execution of a definitive agreement with respect to the Initial Merger.
The Transaction Fee, subject to the conditions set forth herein, may be
paid in cash or in shares of common stock of the Company. The Company
and Advisor acknowledge that in the event Advisor, as a result of this
Agreement, receives shares of 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 Transaction Fee.
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5. OTHER SERVICES
In addition to the Initial Fee Shares, the Introduction Fee Shares, the
Option Shares and Transaction Fee Shares, if any, Advisor agrees to
provide on-going merger and acquisition prospecting on behalf of the
Company following the Initial Merger and, in consideration for such
advisory services, Advisor shall be entitled to a fee ("Advisory Fee")
equal to Ten Thousand Dollars (USD $10,000), payable monthly in cash or
shares of common stock of the Company (the "Advisory Shares").
6. REGISTRATION OF SHARES
No later than ten (10) days following an event giving rise to the
obligation by the Company to pay Advisor the Fee Shares, to deliver the
Option Shares, or to deliver shares as a Transaction Fee or Advisory Fee
(by issuing shares of its common stock for said fee in lieu of cash),
the Company will cause such shares to be registered with the Securities
and Exchange Commission under a Form S-8 or other applicable
registration statement, and it shall cause such registration statement
to be remain effective at all times while Advisor holds such shares. 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 Transaction Fee and/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
Following the Initial Merger, any and all out-of-pocket expenses
incurred during the Primary Term hereof shall be paid by the Company, or
reimbursed to Advisor if paid by Advisor on behalf of the Company,
within thirty (30) 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.
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10. REJECTED BUSINESS COMBINATION
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, finance or participate in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such Business Opportunity, Advisor shall be entitled to
acquire such rejected Business Opportunity for its own account or submit
such Business Opportunity elsewhere, and Advisor shall be entitled to
any and all profits or fees resulting from Advisor's purchase, referral
or placement of any Business Opportunity.
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 its present line of business or, other
than as a result in the Initial Merger or purchase of a
subsequent Business Opportunity, it sells a controlling
interest or substantially all of its assets 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 or cause
the payment of any Transaction Fee(s) or Advisory Fees; or,
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(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 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
Fees, 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.
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(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:
Scientific NRG, Incorporated
0000 Xxxxxxx Xxx
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile:
(ii) In the case of Advisor:
NuVen Advisors Inc.
0000 Xxxxx Xxxxxxx Xxxx., Xxxxx 00-000
Xxx Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) With a copy to:
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.
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(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 the United States, State of California, and
shall be governed by the laws of the State of California, and
United States of America, 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.
[Signatures on following page]
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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
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Name: Xxxx X. Xxxx
Title: President
The "Company"
SCIENTIFIC NRG, INCORPORATED
a Minnesota corporation
By: /s/ XXXXXXXX X. XXXXX
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Name: Xxxxxxxx X. Xxxxx
Title: President
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