[EXHIBIT 10.5]
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is dated February 28, 2007 by and
between UNIVERSAL CAPITAL MANAGEMENT, [INC., a Delaware
corporation] ("Manager"), and THIRD-ORDER NANOTECHNOLOGIES, INC.,
a Nevada corporation ("TDON").
BACKGROUND
TDON desires to obtain from the Manager, and the Manager is
willing and able to provide to TDON, 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.
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(a) TDON 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.
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(a) Manager hereby agrees to provide to TDON the following
services (as amended from time to time, collectively, the
"Services"):
(i) Strategic Planning. Manager shall assist TDON 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) Significant Managerial Assistance. Manager shall provide
TDON with day to day managerial assistance on issues such as
employment, payroll, and benefits; real estate leasing; utility
utilization; capital expenditures; personnel; and other related
matters.
(iii) Financial Reporting Services. Manager shall assist in
providing TDON on a quarter-annual basis a balance sheet, income
statement and statement of cash flow for TDON. Such financial
reports shall be completed not later than thirty (30) days after
the end of the quarter-annual period reported on. Income
statements will be based on generally accepted accounting
principles as in effect in the United States of America,
consistently applied from period to period and in accordance with
the terms of contracts and service agreements.
(iv) Tax Reporting Services. Manager shall assist in the
preparation of sales and use tax returns for all jurisdictions
in which TDON is then subject to reporting as determined by TDON
for goods or services sold. Not later than the 10th business day
of each calendar month in which a sales/use tax liability is due
to be paid TDON, Manager shall provide TDON with the amount of
such liability. Such returns shall be delivered to TDON for
execution no later than three (3) days prior to the filing due
date for any such return.
(v) Accounts Payable Services.
A. Manager shall provide for the usual and ordinary
business aspects of the accounts payable process for TDON,
including but not limited to:
(I.) Maintaining vendor master
(II.) Processing vendor invoices
(III.) Executing vendor payments from TDON's funds
(IV.) Processing travel expense reports
(V.) Executing employee payments for travel expense
from PSI-TEC's funds
(VI.) Stop payment administration
(VII.) 1099 Misc. reporting
(VIII.) Invoice filing
(IX.) Documentation retention
B. Manager shall direct and oversee TDON's outstanding
accounts payable from TDON's funds (if available) to contracted
payment terms and consistent with past business practice.
(a) Investment Banking Consultation Services. Manager will
assist TDON in seeking funding and in preparation for
entering the public market. Manager will provide TDON with
various options and methods for attaining its investment
banking and public market goals.
(b)To the extent that Manager is able in the ordinary course
of business, Manager shall provide or cause to be provided,
all personnel, facilities, equipment, systems and management
necessary or appropriate to provide such Services. In no
event will Manager be required to stay in business or take
other extraordinary measures solely to provide the Services
to TDON; provided, that Manager shall provide Services
pursuant to this Agreement in the same order of priority as
it provides the same or similar services to its own
departments or divisions except where Manager's
extraordinary business needs require otherwise and provided
TDON is notified in advance of any delay and the Services
are provided to TDON at the next available opportunity.
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(c)During the Term of this Agreement, TDON may from time to
time request that Manager provide special services or
projects in addition to the Services identified in this
Section 2, and Manager may in its sole discretion agree to
provide such additional services or projects. If Manager
agrees to provide such additional services or projects, the
Parties shall negotiate in good faith to establish the terms
(including, without limitation, price) for providing such
additional services or projects and following agreement on
such terms, this Section 2 shall be amended to include such
additional services and projects.
3. Term and Termination
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(a) This Agreement shall be effective as of the date first
set forth above and, subject to the provisions of section (b) of
this Section 3, shall terminate on February 28, 2008 (the
"Term"). The Term shall be automatically extended from year to
year in the absence of ninety (90) days' notice from one party
to the other.
(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 TDON upon TDON's failure to pay
the amounts required hereunder and (ii) TDON 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.
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(a) Within thirty (30) days of the signing of this agreement
TDON shall pay Manager for the Services by delivering to Manager
one million (1,000,000) Shares of common stock of the Company. If
the Term of this Agreement extends beyond February 28, 0000, XXXX
shall pay for continuing Services hereunder by delivering five
hundred thousand (500,000) additional Shares to Manager in advance
of March 1, 2008 and each March 1 thereafter during the Term.
(b) In addition, TDON shall reimburse Manager for third party
and out-of-pocket expenses actually and reasonably incurred by
Manager in performing the Services; 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
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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 TDON.
6. Delegation and Assignment. With TDON's prior written consent,
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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 TDON; provided, however, that
Manager and its delegee Affiliate(s) shall be jointly and severally
liable for performance of Manager's obligations under this Agreement.
TDON shall not assign or subcontract its rights, duties, or
obligations under this Agreement.
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7. Confidential Information
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(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.
(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
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times an independent contractor of TDON 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.
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(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
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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.
(b) If Manager' 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, TDON shall have the right to terminate this
Agreement with respect to the disrupted Services immediately upon
written notice to Manager. An event of Force Majeure shall not
operate to extend the Term or to 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
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this Agreement to the contrary, Manager shall not be liable to TDON
by reason of any error of omission or commission, performance or
failure to perform or delay in performing any Services under this
Agreement, for any damages, including, but not limited to, special,
incidental or consequential damages, suffered by TDON beyond a refund
to TDON of all charges paid by TDON to Manager for the Services that
caused such damages, unless Manager shall have gently of gross
negligence or willful misconduct. The provisions of this Section 10
shall survive termination of this Agreement.
11. Indemnification. TDON shall and hereby agrees to indemnify and
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hold harmless the Manager and each of its officers, directors, and
employees from and against any and all claims of any third parties
brought against Manager and all Damages and Expenses incurred by Manager
except such claims or Damages and Expenses, as the case may be, as
shall conclusively be shown to have resulted from Manager's gross
negligence or willful misconduct. The provisions of this Section 11
shall survive the termination of this Agreement.
12. Manager's Investment Representations. Manager hereby
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represents and warrants to and with TDON 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
TDON 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
TDON 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.
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(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.
(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 TDON
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.
13. Definitions.
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(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
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(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.
(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 TDON, par value
$0.001 dollars per share acquired by Manager pursuant to this
Agreement.
14. Miscellaneous.
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(a) Indulgences, Etc. Neither the failure nor any delay on the
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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
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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
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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
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If to: Third-Order Nanotechnologies, Inc.
Xxxx X. Xxxxx, Xx.
c/o Universal Capital Management
0000 Xxxxxx Xxxxx #00
Xxxxxxxxxx, XX 00000
Attention: Ms. Xxxxxxx Xxxxxx
with a copy, given in the manner prescribed above, to:
Xxxxx X. Xxxx
Xxxxx X. Xxxx, P.A.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
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
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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
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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
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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
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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
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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
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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
THIRD-ORDER NANOTECHNOLOGIES, INC. UNIVERSAL CAPITAL MANAGEMENT, INC.
BY: /s/ Xxxx X. Xxxxx, Xx. BY: /s/Xxxxxxx X. Xxxxx
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NAME: Xxxx X. Xxxxx, Xx. NAME: Xxxxxxx X. Xxxxx
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TITLE: President TITLE: President
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