CONSULTING AGREEMENT
AND
COMPENSATION AGREEMENT
THIS CONSULTING AGREEMENT AND COMPENSATION AGREEMENT made as of this
28th day of December, 2000 by and between:
XXXXXX X. XXXXXX, an adult individual residing at 00000 Xxxxx Xxxxx Xxxx,
Xxxxxxxx, Xxxxxxx 00000 (hereinafter "XXXXXX") and XXXXXX X'XXXXXXX, 00 Xxxxxxx
Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 (hereinafter "X'XXXXXXX"), (both being jointly
referred to herein as "B&O")
AND
CAVALCADE OF SPORTS MEDIA, INC., a Nevada corporation having its principal place
of business at 00000 Xxx Xxxxxx, XxxXxx, Xxxxxxxxxx 00000 (hereinafter
CAVALCADE")
WITNESSETH THAT:
WHEREAS, CAVALCADE is in the process of developing a new television
network offering vintage sports programming and requires assistance of
knowledgeable consultants able to introduce CAVALCADE to appropriate
distribution outlets and able to advise CAVALCADE on the proper presentation of
its distribution plan;
WHEREAS, XXXXXX and X'XXXXXXX have substantial experience with, and
contacts in, the television network distribution business and are agreeable to
exploiting such experience and contacts to assist CAVALCADE by (a) providing
their consulting services and (b) obtaining the necessary subscribers for the
vintage sports television network;
NOW, THEREFORE, intending to be legally bound, and in consideration of the
mutual promises and covenants contained herein, the parties have agreed as
follows:
PART I
CONSULTING AGREEMENT
1. RETENTION. For the term provided in Xxxxxxxxx 0, XXXXXXXXX hereby retains and
employs XXXXXX and X'XXXXXXX on the terms and conditions of this Agreement, as
non- exclusive consultants, and XXXXXX and X'XXXXXXX each hereby accept that
retention and employment, upon the terms and conditions of this Agreement.
2. TERM. (a) This Agreement shall become effective as of January 1, 2001.
(b) This Agreement, subject to the termination provisions contained hereafter,
shall continue and exist for an initial period from the effective date to
December 31, 2003.
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(c) Notwithstanding the foregoing, the term of this Agreement is otherwise
subject to the termination provisions contained hereafter.
3. SIGNING BONUS. (a) As an inducement to B&O to enter into this Agreement and
to exploit their experience and contacts for the benefit of CAVALCADE, and as an
inducement to B&O to accept the compensation terms (stock in lieu of cash)
provided in both Part I and in Part II, and in acknowledgment by CAVALCADE that
the services to be rendered will not be rendered equally over the term of this
Agreement but will most likely be concentrated in the initial months, CAVALCADE
shall issue to B&O Four Hundred Thousand (400,000) shares of its Common Stock,
Two Hundred Thousand shares to each of XXXXXX and X'XXXXXXX, as follows:
Date Name Shares
---- ---- ------
January 1, 2001 XXXXXX 100,000
January 1, 2001 X'XXXXXXX 100,000
April 1, 2001 XXXXXX 100,000
April 1, 2001 X'XXXXXXX 100,000
The shares shall be deemed vested as of the dates of issuance.
(b) The shares issued pursuant to this Paragraph 3 are being issued in a private
placement pursuant to Section 4(2) of the Securities Act of 1933 and shall bear
the usual restrictive legend with "Stop Transfer" instructions placed against
the certificates at CAVALCADE's stock transfer agent. XXXXXX and X'XXXXXXX each,
severally, represent and warrant that they are taking such shares with an
investment intent and without a view to distribute, pledge, hypothecate or
otherwise transfer any legal or beneficial interest in or to such shares.
4. COMPENSATION. (a) For all services rendered under this Consulting Agreement,
CAVALCADE shall pay B&O, as a consulting fee, shares of its Common Stock at the
rate of Fifteen Thousand (15,000) shares per month, to be issued as Seven
Thousand Five Hundred (7,500) shares to each of XXXXXX and X'XXXXXXX. Such
shares shall be issued in arrears, i.e., as of the first day of each month for
the consulting services rendered in the prior month. (For example, the shares to
be issued for the services rendered during January 2001 shall be issued on
February 1, 2001.) If the first day of a month is a Saturday, Sunday, holiday or
day on which the securities markets are closed, the shares shall be issued on
the first succeeding market trading day.
(b) The parties acknowledge that CAVALCADE has filed Form 10-SB with the
Securities and Exchange Commission to register its Common Stock under the
Securities Exchange Act of 1934. The parties understand that trading in
CAVALCADE's Common Stock cannot commence until CAVALCADE has cleared all
comments of the SEC with respect to such filing, irrespective of its automatic
effectiveness on the 60th day after filing. The parties further understand that
the NASD will not permit an initial market maker to file Form 211 for
authorization to make a
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market in CAVALCADE's Common Stock until the SEC has notified it that CAVALCADE
has cleared all comments. Finally, the parties understand that CAVALCADE cannot
file a Form S-8 Registration Statement under the Securities Act of 1933 until it
has cleared all comments and commenced trading. Accordingly,.until the month in
which trading commences, the shares issued pursuant to sub-paragraph (a) above
shall be issued in a private placement pursuant to Section 4(2) of the
Securities Act of 1933 and shall bear the usual restrictive legend with "Stop
Transfer" instructions placed against the certificates at CAVALCADE's stock
transfer agent. Immediately upon the clearing of all comments and the
commencement of trading, both, CAVALCADE shall file a Form S-8 Registration
Statement with the SEC registering the balance of the shares to be issued under
this Part I and thereafter all shares shall be issued pursuant to such
Registration Statement (i.e., free-trading shares).
(c) To the extent that shares are issued under this Paragraph 4 prior to the
filing of Form S-8, XXXXXX and X'XXXXXXX each, severally, represent and warrant
that they are taking such shares with an investment intent and without a view to
distribute, pledge, hypothecate or otherwise transfer any legal or beneficial
interest in or to such shares.
5. DUTIES. CAVALCADE is employing B&O, and each of them, under this Agreement to
provide consulting services to it as independent contractors. B&O shall: (a)
investigate available uplink and satellite services available to CAVALCADE,
report to and advise CAVALCADE with respect to the relative availability,
reliability, cost, etc. of the choices, and advise and assist CAVALCADE in
negotiating with the selected provider(s); (b) provide ongoing supervisory
service with respect to the selected provider(s) of uplink and satellite
service, assist CAVALCADE in the event of required replacement, and advise
CAVALCADE with respect to backup or emergency service in the event of failure or
default on the part of the selected provider(s); (c) investigate playback
services available to CAVALCADE, report to and advise CAVALCADE with respect to
the relative availability, reliability, cost, etc. of the choices, and advise
and assist CAVALCADE in negotiating with the selected provider(s); (d) provide
ongoing supervisory service with respect to the selected playback provider(s),
assist CAVALCADE in the event of required replacement, and advise CAVALCADE with
respect to backup or emergency service in the event of failure or default on the
part of the selected provider(s); (e) develop, do the necessary background
research for, write, and implement for CAVALCADE a comprehensive distribution
plan; (f) identify an advertising and sales organization for CAVALCADE and
assist CAVALCADE in negotiating and contracting with the selected entity on a
revenue sharing basis; (g) negotiate and contract for overnight infomercial
revenue for CAVALCADE; (h) provide ongoing quality control consultations of
on-air look and related marketing materials and programs (including commercial
formatting); and (i) such other services as deemed necessary or desirable from
time to time under changing conditions as CAVALCADE's network develops.
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B&O's performance shall be subject to the supervision of CAVALCADE'S Board of
Directors. The precise job scope and the specific services to be rendered by B&O
may be defined, interpreted, curtailed, or extended, from time to time, by
determination of the Board of Directors of CAVALCADE, provided, however, that
any definition, interpretation, curtailment, or extension is consistent with the
status, education, background and experience of XXXXXX and/or X'XXXXXXX as
otherwise contemplated herein.
6. EXTENT AND PLACE OF SERVICES. (a) XXXXXX and X'XXXXXXX each shall devote such
adequate, reasonable, and proper time, attention, and energies to the business
of CAVALCADE as shall be necessary or consistent with the performance of their
duties hereunder. XXXXXX and X'XXXXXXX are independent contractors, shall
provide their own offices and working facilities, office furniture, equipment,
and utilities, and clerical assistance, and shall determine their own hours,
their own methods of working, and the hours and times of working.
(b) CAVALCADE acknowledges awareness that XXXXXX and X'XXXXXXX will be employed
by, or providing services for, other parties and that this retention and
employment is not exclusive on the part of B&O..
7. EXPENSES. B&O are not authorized to incur expenses on behalf of, or
chargeable to, CAVALCADE, including but not limited to their business travel,
including transportation, lodging, food, entertainment, etc. except within such
guidelines as may be established from time to time by the Board of Directors of
CAVALCADE. CAVALCADE shall reimburse B&O for authorized expenses within such
guidelines upon presentation by B&O, from time to time, of an itemized account
of such expenditures in such form as CAVALCADE may require, together with
receipts or other proofs of the expenditures as may be required.
PART II
COMPENSATION AGREEMENT
1. APPOINTMENT. (a) CAVALCADE hereby appoints B&O, on the terms and conditions
of this Agreement, as its non-exclusive outside distribution outlet sales
representative for the term of this Agreement..
(b) During the term of this Agreement, CAVALCADE may, using its own management
and employees, seek to market and sell the CAVALCADE vintage sports network to
any distribution outlet. In addition, CAVALCADE may appoint other outside
representatives. The parties shall, in good faith, seek not to circumvent one
another or to enter into competitive negotiations.
2. PERFORMANCE COMPENSATION. (a) B&O shall negotiate with such distribution
outlets as they may select for the distribution of the CAVALCADE network. At
December 31 of each year during the term of this Agreement, the parties shall
determine, based upon the last xxxxxxxx for that calendar year to all such
B&O-negotiated distribution outlets, the total number of
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homes (subscribers) to the CAVALCADE network. of that calendar year for which
B&O are to be compensated.
(b) As compensation for their services in securing homes (subscribers) over the
term of this Agreement, B&O shall be compensated by the issuance of shares of
CAVALCADE's Common Stock, to be divided equally between XXXXXX and X'XXXXXXX, as
follows:
(i) for the first 5,000,000 homes (subscribers), 50,000 shares of Common
Stock for each 1,000,000 homes (subscribers); and
(ii) for the next 15,000,000 homes (subscribers, 100,000 shares of Common
Stock for each 1,000,000 homes (subscribers); and
(iii) for all homes (subscribers) in excess of 20,000,000 homes
(subscribers), 200,000 shares for each 1,000,000 homes (subscribers).
(c) The compensation provided herein is cumulative, year-to-year; i.e.,. the
total number of homes at the end of calendar year 2001 shall be subtracted from
the total number of homes at the end of calendar year 2002, and CAVALCADE shall
pay compensation for the increase only, the base number for 2001 being deemed
already compensated for. Likewise, the greater of the total number of homes at
the end of calendar years 2001 and 2002 shall be subtracted from the total
number of homes at the end of calendar year 2003, and CAVALCADE shall pay
compensation for the increase only, the base number being deemed already
compensated for.
(d) (b) The shares to be issued pursuant to this Paragraph 2 will be issued in a
private placement pursuant to Section 4(2) of the Securities Act of 1933 and
shall bear the usual restrictive legend with "Stop Transfer" instructions placed
against the certificates at CAVALCADE's stock transfer agent. XXXXXX and
X'XXXXXXX each, severally, represent and warrant that they are taking such
shares with an investment intent and without a view to distribute, pledge,
hypothecate or otherwise transfer any legal or beneficial interest in or to such
shares.
3. STOCK OPTIONS. (a) As incentive compensation to B&O to maximize their efforts
during the initial phases of this Agreement, CAVALCADE hereby grants to B&O, to
be deemed granted by equal division between XXXXXX and X'XXXXXXX, options to
purchase 3,000,000 shares of the Common Stock of CAVALCADE. The options shall
have the following terms and conditions:
(i) The 3,000,000 options shall be issued as of January 1, 2001;
however, the options shall not be deemed vested, and may not be exercised until
and unless vested.
(ii) The options shall vest in arrears at the rate of 500,000 shares
for each six months of service; e.g., 500,000 options for the period ended June
30, 2001 shall vest on July 1, 2001.
(iii) Once vested, subject to accelerated vesting as provided in Part
III, Paragraph 1 below, options may be exercised at any time, and from time to
time, in whole or in part, until December 31, 2004, or, in the event of
accelerated vesting may be exercised at any time and from time to time, in whole
or in part until the day three days prior to the scheduled closing of the
triggering transaction, at which time any unexercised options shall lapse, and
shall be deemed null and void and of no further effect.
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(iv) The current fair market value of the Common Stock of CAVALCADE is
calculated to be $1.25, based upon the conversion price of the outstanding
Capital Notes. The shares to be issued upon exercise of any options shall be
restricted (i.e., unregistered, and therefore a discount of twenty-five percent
(25%) is deemed appropriate, and accordingly the exercise price is set at
ninety-four cents ($0 .94) per share. XXXXXX and X'XXXXXXX have been notified by
CAVALCADE of their possible election under Section 83 of the Internal Revenue
Code.
(v) The options shall be non-transferable except by operation of law or by
the laws of descent and distribution.
(vi) CAVALCADE shall promptly upon execution of this Agreement secure
approval of this option program as so-called "Incentive Stock Options"
(qualified) for Internal Revenue purposes.
(vi) Each option, upon vesting, shall be exercisable for the purchase of
one (1) share of Common Stock at the exercise price of $0.94 per share.
(vii) Option holders shall not have any rights as stockholders.
(b) The shares to be obtained upon exercise of the options will be issued in a
private placement pursuant to Section 4(2) of the Securities Act of 1933 and
shall bear the usual restrictive legend with "Stop Transfer" instructions placed
against the certificates at CAVALCADE's stock transfer agent. XXXXXX and
X'XXXXXXX each, severally, represent and warrant that they are taking such
shares with an investment intent and without a view to distribute, pledge,
hypothecate or otherwise transfer any legal or beneficial interest in or to such
shares.
PART III
MISCELLANEOUS
1. ACQUISITION OF CAVALCADE. Subject to sub-paragraph (c) below, in the event
that during the term of this Agreement: (a) CAVALCADE shall be acquired by
another corporation, whether by cash and/or stock tender offer to the
stockholders, merger ("A" Reorganization) or stock-for-stock exchange ("B"
Reorganization), or (b) the assets of CAVALCADE shall be acquired in a voluntary
cash sale or in a "C" or "D" stock-for-assets reorganization; then:
(i) all consulting fee compensation shares not yet issued for the balance
of the term of this Agreement shall be issued as of the day ten days prior to
the closing of the triggering transaction; and
(ii) all Performance Compensation (Part II, Paragraph 2) shares issuable
for the number of homes (subscribers obtained by B&O to the end of the month
preceding the triggering transaction shall be issued as of the day ten days
prior to the closing of the triggering transaction; and (iii) all Performance
Stock Options (Part II, Paragraph 3) not yet vested shall vest as of the day ten
days prior to the scheduled closing of the triggering transaction.
(c) It is the intent of this Paragraph to permit XXXXXX and O"DONNELL to
participate fully in
Page 6 of 9
any of the referenced acquisition transactions, while facilitating the closing
of any such transaction. Accordingly, the foregoing shall be interpreted broadly
to maximize the potential participation of XXXXXX and X'XXXXXXX, but any
postponement of the originally scheduled closing of a triggering transaction
shall not extend the deadline for exercise of any Performance Stock Options.
Furthermore, in the event that any anticipated triggering transaction shall not
close, then Paragraphs (a) and (b) above shall be deemed null and void, any
shares issued in anticipation of the closing shall be canceled, any options
which were not exercised shall be returned to their original vesting schedule,
and XXXXXX and/or X'XXXXXXX may rescind any exercise transactions made in
anticipation of the closing, and the parties shall otherwise be restored to
their positions quo ante.
2. TERMINATION. Notwithstanding anything herein contained to the contrary:
(a) CAVALCADE may terminate this agreement upon a breach of any of the
terms of this Agreement by XXXXXX, X'XXXXXXX and/or B&O. Cause under this
paragraph shall include, but is not limited to, failure to perform at a
reasonable level, gross negligence in the performance of the duties, malfeasance
or misfeasance, dereliction of duty, drug use, alcoholism, adverse public
notoriety, and/or conviction of a felony relating to the duties to be performed.
Should any cause stated by CAVALCADE be amenable to cure, B&O shall have a
period of thirty (30) days to effect such cure.
(b) CAVALCADE may terminate this Agreement upon thirty (30) days'
notice to B&O upon the happening of any of the following events: (1) loss by
CAVALCADE of required regulatory authorizations or licenses; (2) a bona fide
decision by CAVALCADE to terminate its business and liquidate its assets; (3)
mutual written agreement of the parties; or (4) failure of CAVALCADE to obtain
and digitize/format sufficient film to carry the network on its projected
schedule. (c) B&O may terminate this Agreement upon thirty (30) days' notice to
CAVALCADE in the event of a breach by CAVALCADE of any of the provisions of this
Agreement not cured within the thirty (30) days after receipt of the termination
notice.
3. ARBITRATION. Any controversy or claim arising out of, or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in New York,
New York in accordance with the rules then pertaining of the American
Arbitration Association, but with all rights of discovery provided by the New
York Rules of Civil Procedure, and judgment upon the award rendered may be
entered in any court having jurisdiction thereof.
4. WAIVER OF BREACH. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
5. BENEFIT. The rights and obligations of the parties under this Agreement shall
inure to the benefit of, and shall be binding upon, their successors and
assigns.
Page 7 of 9
6. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing, and if sent by certified mail to his
residence in the case of XXXXXX and/or X'XXXXXXX, or to its principal office in
the case of CAVALCADE.
7. ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties and may be modified only by agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought. There are no representations or warranties by any party
except those stated herein. This Agreement specifically supersedes the original
letter of intent of November 28, 2000.
8. APPLICABLE LAW. This Agreement shall be governed for all purposes by the laws
of the State of New York. If any provision of this Agreement is declared void,
such provision shall be deemed severed from this Agreement, which shall
otherwise remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
including facsimile counterparts, any one of which shall be deemed to be an
original.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto set their hands and seals as of the day and year hereinabove
written.
CAVALCADE OF SPORTS MEDIA, INC..
ATTEST:
By:
-------------------------------
President
-------------------------
Secretary
WITNESS: CONSULTANT:
-----------------------
XXXXXX X. XXXXXX
-----------------------
XXXXXX X'XXXXXXX
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RIDER TO
CONSULTING AGREEMENT
AND
COMPENSATION AGREEMENT
I, Xxxxxx Xxxxxx, President of Cavalcade of Sports Media, Inc., hereby
authorize the substitution of Lynrow Associates, LLC, a Connecticut LLC, for the
individual Xxxxxx X'Xxxxxxx, 00 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 in the
Consulting Agreement and Compensation Agreement made by and between Xxxxxx X.
Xxxxxx, Xxxxxx X'Xxxxxxx and Cavalcade of Sports Media, Inc. on December 28,
2000.
CAVALCADE OF SPORTS MEDIA, INC..
By:
------------------------------
President
-----------------------
XXXXXX X'XXXXXXX
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