MANAGEMENT ADVISORY AGREEMENT
EXHIBIT
10.2
THIS
MANAGEMENT ADVISORY AGREEMENT (this “Agreement”), dated as of
September 20, 2010 (the “Effective Date”), is by and
among CHESSCOM TECHNOLOGIES, INC., a Nevada corporation (the “Company”) and CHESSCOM
MANAGEMENT ADVISORS, INC., a Delaware corporation (the “Advisor”) and wholly-owned
subsidiary of LEXICON UNITED INCORPORATED, a Delaware corporation.
RECITALS
WHEREAS, the Company desires
to avail itself of the experience, sources of information, advice, assistance
and certain facilities available to the Advisor (as defined below) and to have
the Advisor undertake the duties and responsibilities hereinafter set forth, on
behalf of, and subject to the supervision of, the Board of Directors, all as
provided herein; and
WHEREAS, the Advisor is
willing to undertake to render such services, subject to the supervision of the
Board of Directors, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Definitions. As used
in this Agreement, the following terms have the definitions hereinafter
indicated:
Advisor.
Chesscom Management Advisors, Inc., a Delaware corporation, any successor
advisor to the Company or any successor advisor subcontractors with respect to
substantially all of its functions.
Affiliate or
Affiliated. An Affiliate of another Person includes only the following:
(i) any Person directly or indirectly owning, controlling, or holding with
the power to vote ten percent (10.0%) or more of the outstanding voting
securities of such other Person; (ii) any Person ten percent (10.0%) or
more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any
Person directly or indirectly controlling, controlled by, or under common
control with such other Person; (iv) any executive officer, director,
trustee, or general partner of such other Person; and (v) any legal entity
for which such Person acts as an executive officer, director, trustee, or
general partner.
Articles of
Incorporation. The Articles of Incorporation of the Company filed
pursuant to the Nevada Revised Statutes, as amended from time to
time.
Management
Fee. The Management Fee payable to the Advisor as defined in Section 8.
Board of
Directors or Board. The persons holding such office, as of any particular
time, under the Articles of Incorporation of the Company, whether they be the
Directors named therein or additional or successor Directors.
Bylaws.
The bylaws of the Company, as the same are in effect from time to
time.
Company.
Chesscom Technologies, Inc., a corporation organized under the laws of the State
of Nevada.
Director.
A member of the Board of Directors of the Company.
Person. An
individual, corporation, partnership, estate, trust, a portion of a trust
permanently set aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation within the
meaning of Section 509(a) of the Code, joint stock company or other entity, or
any government or any agency or political subdivision thereof, and also includes
a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
2. Appointment. The
Company appoints the Advisor to serve as its advisor as of the Effective Date,
on the terms and conditions set forth in this Agreement, and the Advisor hereby
accepts such appointment as of the Effective Date.
3. Duties and Authority of the
Advisor. The Advisor undertakes to use its commercially reasonable
efforts to manage, administer, promote, maintain, and improve the assets and
operations of the Company in a professional and diligent manner. The services of
the Advisor are to be of scope and quality not less than those generally
performed by professional executives and managers of other similar companies.
The Advisor shall make available the full benefit of the judgment, experience
and advice of the members of the Advisor’s organization and staff with respect
to the duties it will perform under this Agreement. To facilitate the Advisor’s
performance of these undertakings, but subject to the restrictions included in
Sections 4
and 7 and the
provisions of Section 11 and
to the continuing and exclusive authority of the Board, the Company hereby
delegates to the Advisor the authority to, and the Advisor hereby agrees to,
either directly or by engaging a duly qualified and licensed Affiliate of the
Advisor or other duly qualified and licensed Person:
(a) serve as the
Company’s sole and exclusive operations and financial advisor and, as requested
by the Board, provide such information and data as may be requested from time to
time with respect to the Company’s operations and financial
results;
(b) provide the daily
management of the Company and perform and supervise the various administrative
functions reasonably necessary for the management of the
Company;
(c) maintain and preserve
the books and records of the Company, including maintaining the accounting and
other record-keeping functions with respect to the Company;
(d) investigate, select,
and, on behalf of the Company, engage and conduct business with such Persons as
the Advisor deems necessary to the proper performance of its obligations
hereunder, including but not limited to consultants, accountants,
correspondents, lenders, technical advisors, attorneys, corporate fiduciaries,
depositaries, custodians, agents for collection, insurers, insurance agents,
banks, construction contractors, developers, property owners, property
management companies, real estate operating companies, securities investment
advisors, mortgagors, and any and all agents for any of the foregoing, including
Affiliates of the Advisor, and Persons acting in any other capacity deemed by
the Advisor necessary or desirable for the performance of any of the foregoing
services, including but not limited to entering into contracts in the name of
the Company with any of the foregoing;
(e) make capital
investments in and dispositions within the discretionary limits and authority as
granted by the Board and in accordance with the Articles of
Incorporation;
(f) consult with the
Board and assist the Board in the formulation and implementation of the
Company’s financial policies, and, as necessary, furnish the Board with advice
and recommendations with respect to the financial and operational objectives and
policies of the Company and in connection with any borrowings proposed to be
undertaken by the Company;
(g) select joint venture
partners, structure corresponding agreements and oversee and monitor these
relationships;
(h) recommend to the
Board of Directors appropriate transactions which would provide liquidity to the
Company;
(i) oversee the
performance by a third party or Affiliates, including collection of payments due
from third parties the payment of expenses related to the Company’s business and
operations;
(j) review, analyze and
comment upon the operating budgets, capital budgets and the like and aggregate
these budgets into the Company’s overall budget;
(k) review and analyze
on-going financial information pertaining to the Company’s
operations;
(l) if an action or
transaction requires approval by the Board of Directors, deliver to the Board of
Directors all documents requested by them in their evaluation of the proposed
action or transaction;
(m) formulate and oversee
the implementation of strategies for the administration, promotion, management,
operation, maintenance, financing and marketing of the Company;
(n) (i) locate, analyze
and select potential business opportunities; (ii) structure and negotiate the
terms and conditions of transactions for new business opportunities;
(iii) make investments on behalf of the Company in compliance with the
investment objectives and policies of the Company; (iv) on a best efforts
basis, arrange for financing and otherwise deal with the Company’s assets and
investments; (v) enter into supply agreements, leases and acquire property
interests related to the Company’s operations; (vi) enter into service
contracts; (vii) oversee the performance of all third-party contractors;
and (viii) to the extent necessary, perform all other operational functions
for the operation and maintenance of the Company and its assets;
(o) obtain the prior
approval of the Board, any particular Directors specified by the Board or any
committee of the Board, as the case may be, for any and all investments outside
of the ordinary course of the Company’s business;
(p) negotiate on behalf
of the Company with banks or lenders for loans to be made to the Company;
provided, further, that any fees and costs payable to third parties incurred by
the Advisor in connection with the foregoing shall be the responsibility of the
Company;
(q) on behalf of the
Company, maintain, customary insurance, including but not limited to customary
fire, casualty and public liability insurance;
(r) from time to time,
or at any time reasonably requested by the Board, provide information or make
reports to the Board related to its performance of services to the Company under
this Agreement;
(s) provide the Company
with all necessary cash management services;
(t) notify the Board of
all proposed material transactions before they are completed;
(u) supervise the
preparation and filing and distribution of returns and reports to governmental
agencies;
(v) establish and
maintain bank accounts on behalf of the Company pursuant to Section 5 of
this Agreement;
(w) at the expense of the
Company, provide
office space, equipment and personnel as required for the performance of the
foregoing services as the Advisor; and
(x) do all things it
reasonably deems necessary to assure its ability to render the services
described in this Agreement.
4. Modification or Revocation of
Authority of Advisor. The Board may, at any time upon the giving of
notice to the Advisor, modify or revoke the authority or approvals set forth in
Section 3;
provided, however, that
such modification or revocation shall be effective upon receipt by the Advisor
and shall not be applicable to actions or transactions to which the Advisor has
committed the Company prior to the date of receipt by the Advisor of such
notification.
5. Bank Accounts. At the
direction of the Board of Directors, the Advisor may establish and maintain one
or more bank accounts in its own name for the account of the Company or in the
name of the Company and may collect and deposit into any such account or
accounts, and disburse from any such account or accounts, any money on behalf of
the Company, under such terms and conditions as the Board may approve, provided
that no funds shall be commingled with the funds of the Advisor; and the Advisor
shall from time to time render appropriate accountings of such collections and
payments to the Board and to the auditors of the Company.
6. Records; Access. The
Advisor shall maintain appropriate records of all its activities hereunder and
make such records available for inspection by the Board and by counsel, auditors
and authorized agents of the Company, at any time or from time to time during
normal business hours. The Advisor shall at all reasonable times have access to
the books and records of the Company.
7. Limitations on
Activities. Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its
sole judgment made in good faith, would violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company or otherwise not be permitted by the Articles of Incorporation or
Bylaws of the Company, except if such action shall be ordered by the Board, in
which case the Advisor shall notify promptly the Board of the Advisor’s judgment
of the potential impact of such action and shall refrain from taking such action
until it receives further clarification or instructions from the Board. In such
event the Advisor shall have no liability for acting in accordance with the
specific instructions of the Board so given. Notwithstanding the foregoing, the
Advisor, its directors, officers, employees and stockholders, and stockholders,
directors and officers of the Advisor’s Affiliates shall not be liable to the
Company, the Board or to the Stockholders for any act or omission by the
Advisor, its directors, officers, employees or stockholders, or stockholders,
directors or officers of the Advisor’s Affiliates taken or omitted to be taken
in the performance of their duties under this Agreement except as provided in
Sections 19 and
20 of this
Agreement.
8. Management Fee. The
Advisor or its Affiliates shall receive as compensation for services rendered in
connection with this Agreement the following: Advisor or its
Affiliates shall receive as compensation for services rendered in connection
with this Agfreement the following: $52,000 per annum as Base
Pay. The base Pay shall be paid to Advisor or its Affiliates on a
bi-weekly basis on the same schedule as all other employees of the
Company.
9. Expenses.
(a) Reimbursable
Expenses. In addition to the compensation paid to the Advisor pursuant to
Section 8
hereof, the Company shall pay directly or reimburse the Advisor for all of the
expenses paid or incurred by the Advisor (to the extent not reimbursable by
another party) in connection with the services it provides to the Company
pursuant to this Agreement, including, but not limited to:
(i) the actual cost of goods
and services used by the Company;
(ii) interest and other costs
for borrowed money, including discounts, points and other similar
fees;
(iii) taxes and assessments on
income of the Company or any of the Properties;
(iv) costs associated with
insurance required in connection with the business of the Company or by the
Board;
(v) expenses of managing and
operating the business and assets of the Company, whether payable to an
Affiliate of the Company or a non-Affiliated Person;
(vi) all compensation and
expenses payable to the Directors in connection with their services to the
Company and the Stockholders and their attendance at meetings of the
Directors;
(vii) expenses of organizing,
redomesticating, merging, liquidating or dissolving the Company or of amending
the Articles of Incorporation or the Bylaws;
(viii) administrative service
expenses (including (a) personnel costs and (b) the Company’s
allocable share of other overhead of the Advisor such as rent and
utilities);
(ix) audit, accounting, legal
and other professional fees; and
(x) all other administrative
service expenses, including all costs and expenses incurred by Advisor in
fulfilling its duties hereunder. Such costs and expenses may include reasonable
wages and salaries and other employee-related expenses of all employees of the
Advisor or its Affiliates who are engaged in the management, administration,
operations, or marketing of the Company, including taxes, insurance and benefits
relating to such employees, and legal, travel and other out-of-pocket expenses
which are directly related to their services provided hereunder.
(b) Other
Services. Should the Board request that the Advisor, any Affiliate of the
Advisor or any director, officer or employee thereof render services for the
Company other than set forth in Section 3, such
additional services, if the Advisor elects to perform them, shall be separately
compensated at such rates and in such amounts as are agreed by the Advisor and
the Board, subject to the limitations contained in the Articles of
Incorporation, shall not exceed an amount that would be paid to non-Affiliated
third parties for similar services, and shall not be deemed to be services
pursuant to the terms of this Agreement.
(c) Timing of and
Limitations on Reimbursements.
(i) Expenses incurred by the
Advisor on behalf of the Company and payable pursuant to this Section 9 shall
be reimbursed at least monthly to the Advisor. The Advisor shall prepare a
statement documenting the expenses of the Company during each month, and shall
deliver such statement to the Company within fifteen (15) days after the
end of each calendar month.
(ii) The foregoing
reimbursements of expenses, as limited by this Agreement, will be made
regardless of whether any cash distributions are made to the
Stockholders.
10. Statements. The
Advisor shall furnish to the Company not later than the thirtieth (30th) day
following the end of each calendar year, a statement showing a computation of
the fees or other compensation payable to the Advisor or an Affiliate of the
Advisor with respect to such calendar year under Sections 8 and
9 hereof. The
final settlement of compensation payable under Sections 8 and
9 hereof for
each calendar year shall be subject to adjustments in accordance with, and upon
completion of, the annual audit of the Company’s financial
statements.
11. Other Activities of the
Advisor. Nothing herein contained shall prevent the Advisor from engaging
in other activities, including, without limitation, the rendering of advice to
other Persons nor shall this Agreement limit or restrict the right of any
director, officer, employee, or stockholder of the Advisor or its Affiliates to
engage in any other business or to render services of any kind to any other
partnership, corporation, firm, individual, trust or association. The Advisor
may, with respect to any transaction in which the Company is a participant, also
render advice and service to each and every other participant therein. The
Advisor shall report to the Board the existence of any condition or
circumstance, existing or anticipated, of which it has knowledge, which creates
or could create a conflict of interest between the Advisor’s obligations to the
Company and its obligations to or its interest in any other partnership,
corporation, firm, individual, trust or association.
12. Non-Solicitation. The
Company agrees not to solicit any current and/or future employees of the Advisor
or its Affiliates for employment or in any consulting or similar capacity for
two (2) years following the termination of this Agreement.
13. Information Furnished to the
Advisor. The Board of Directors will keep the Advisor informed concerning
the operational and financing policies of the Company. The Board of Directors
shall notify the Advisor promptly of its intention to make any changes to such
policies. Upon request of the Advisor, the Company shall furnish the Advisor
with a certified copy of any Company financial statements, a signed copy of each
report prepared by independent certified public accountants, and such other
information with regard to its affairs as the Advisor may reasonably
request. The Company will make available, without limitation, all
intellectual property owned by the Company and all passwords, codes and
information required to access all Company information systems and intellectual
propertyaccess requirements.
14. Relationship of Advisor and
Company. The Company and the Advisor are not partners or joint venturers
with each other, and nothing in this Agreement shall be construed to make them
such partners or joint venturers or impose any liability as such on either of
them.
15. Term. This Agreement
shall continue in force until the first anniversary of the Effective Date,
subject to an unlimited number of successive one-year renewals upon mutual
consent of the parties. The Board will evaluate the performance of the Advisor
annually before renewing the Agreement.
16. Termination.
(a) This Agreement may be
terminated upon sixty (60) days written notice without cause or penalty, by
either party (if by the Company, only upon approval of a majority of the members
of the Board of Directors).
(b) Survival.
The provisions of Sections 6, 7, 12, 14,
and 17 through 30, and the
provisions of Section 8, shall
survive expiration or termination of this Agreement.
17. Assignment. This
Agreement shall not be assigned by the Advisor to a non-Affiliate. This
Agreement may be assigned by the Advisor to an Affiliate with the approval of
the Board. Notwithstanding the foregoing, the Advisor may assign any rights to
receive fees or other payments under this Agreement without obtaining the
approval of the Board. This Agreement shall not be assigned by the Company
without the consent of the Advisor, except in the case of an assignment by the
Company to a corporation or other organization which is a successor to all of
the assets, rights and obligations of the Company, as the case may be, in which
case such successor organization shall be bound hereunder and by the terms of
said assignment in the same manner as the Company is bound by this
Agreement.
18. Payments to and Duties of
Advisor Upon Termination.
(a) After the expiration
or termination of this Agreement, the Advisor shall not be entitled to
compensation for further services hereunder except that it shall be entitled to
receive from the Company within thirty (30) days after the effective date
of such termination all unpaid reimbursements of expenses and all earned but
unpaid fees payable to the Advisor prior to termination of this Agreement;
and
(b) The Advisor shall
promptly upon termination:
(i) pay over to the Company
all money collected and held for the account of the Company pursuant to this
Agreement, after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled;
(ii) deliver to the Board a
full accounting, including a statement showing all payments collected by it and
a statement of all money held by it, covering the period following the date of
the last accounting furnished to the Board;
(iii) deliver to the Board all
assets and documents of the Company then in the custody of the Advisor;
and
(iv) cooperate with the
Company to provide an orderly management transition.
19. Indemnification by the
Company. The Company shall indemnify and hold harmless the
Advisor and its Affiliates, including their respective officers, directors,
partners and employees, from all liability, claims, damages or losses arising in
the performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or
losses and related expenses are not fully reimbursed by insurance, provided that
the Company shall not indemnify and hold harmless the Advisor or its Affiliates
unless:
(a) the Advisor or its
Affiliates have determined, in good faith, that the course of conduct which
caused the loss or liability was in the best interests of the
Company;
(b) the Advisor or its
Affiliates were acting on behalf of or performing services for the
Company;
(c) such liability or loss was
not the result of negligence or misconduct by the Advisor or its Affiliates;
and
(d) such indemnification or
agreement to hold harmless is recoverable only out of Company’s net assets and
not from its stockholders. The obligation of the Company to indemnify
or hold harmless the Advisor and its Affiliates shall also be subject to any
limitations imposed by Nevada law.
20. Indemnification by
Advisor. The Advisor shall indemnify and hold harmless the Company from
contract or other liability, claims, damages, taxes or losses and related
expenses, including attorneys’ fees, to the extent that such liability, claims,
damages, taxes or losses and related expenses are not fully reimbursed by
insurance and are incurred by reason of the Advisor’s bad faith, fraud, willful
misfeasance, misconduct, or reckless disregard of its duties, but the Advisor
shall not be held responsible for any action of the Board in following or
declining to follow advice or recommendation given by the Advisor.
21. Fidelity Bond. The
Advisor shall not be required to obtain or maintain a fidelity bond in
connection with the performance of its services hereunder.
22. Notices. Any notice,
report or other communication required or permitted to be given hereunder shall
be in writing unless some other method of giving such notice, report or other
communication is required by the Articles of Incorporation, the Bylaws, or
accepted by the party to whom it is given, and shall be given by being delivered
by hand or by overnight mail or other overnight delivery service to the
addresses set forth herein:
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To
the Board and to the Company:
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Chesscom
Technologies, Inc .
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000
X. Xxxxxxx Xxxx., Xxxxx 000
Xxx
Xxxxx, Xxxxxx 00000
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Attention:
President
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To
the Advisor:
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Chesscom
Management Advisors, Inc.
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0000
Xxxxxxx Xxxxx Xxxx, Xxxxx 0000
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Xxxxxx,
XX 00000
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Attention:
President
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Either
party may at any time give notice in writing to the other party of a change in
its address for the purposes of this Section 22.
23. Amendments. This
Agreement shall not be changed, modified, terminated, or discharged, in whole or
in part, except by an instrument in writing signed by each of the parties
hereto, or their respective successors or assignees.
24. Severability. The
provisions of this Agreement are independent of and severable 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.
25. Construction. The
provisions of this Agreement shall be construed and interpreted in accordance
with the laws of the State of Texas.
26. Entire Agreement.
This Agreement contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express
or implied, oral or written, of any nature whatsoever with respect to the
subject matter hereof. 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.
27. Indulgences, Not
Waiver. Neither the failure nor any delay on the part of a 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.
28. Gender. Words used
herein regardless of the number 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 requires.
29. Titles Not to Affect
Interpretation. The titles of sections and subsections contained in this
Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation
hereof.
30. Execution in
Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
the counterparts hereof, taken together, bear the signatures of all of the
parties reflected hereon as the signatories.
[Signatures
Appear on Next Page]
IN WITNESS WHEREOF, the
parties hereto have executed this Management Advisory Agreement as of the day
and year first above written.
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CHESSCOM
TECHNOLOGIES, INC.
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By:
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/s/ Xxxxxx X. Xxxx
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Name:
Xxxxxx X. Xxxx
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Title:
President
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CHESSCOM
MANAGEMENT ADVISORS, INC.
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By:
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/s/ Xxxxxxx Xxxxx
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Name:
Xxxxxxx Xxxxx
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Title:
President
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