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EXHIBIT 10.1
FINANCIAL CONSULTANT AGREEMENT
THIS FINANCIAL CONSULTANT AGREEMENT (the "Agreement") is made and
entered into as of October 7, 1996 by and between Xxxx Xxxxx, a natural person,
having a principal place of business at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000 ("Consultant") and Capitol Communities Corporation, a Nevada
corporation, having its principal place of business at 00000 Xxxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000 ("Client").
R E C I T A L S
WHEREAS, Consultant has expertise in strategic planning and corporate
development and provides services designed to improve performance results
achieved by specified companies, which services consist primarily of
identifying such companies' strengths and weaknesses and developing a strategy
to complement or mitigate such attributes in a manner to heighten public
interest in such companies, and may include identifying potential acquisition
or divestiture opportunities or other avenues of implementation consistent with
such planning; and
WHEREAS, Consultant has expertise in public relations and provides
services designed to heighten public awareness of the business conducted and
performance results achieved by specified companies, which services consist
primarily of organizing and assembling information provided to the Consultant
by the Client in a format which profiles the Client and which is conducive to
dissemination in appropriate information channels and networks, and
disseminating such information; and
WHEREAS, Client wishes to enlist Consultant to provide such services,
and Consultant and Client wish to formalize in a written agreement the terms
and conditions under which Consultant will provide such services to Client.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Agreement, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. INCORPORATION OF RECITALS. The foregoing recitals are
incorporated herein by reference and made a part hereof as though set forth at
length throughout the rest of this Agreement.
2. INFORMATION TO BE FURNISHED BY CLIENT. Client shall furnish
Consultant with current public information about Client, including any and all
statements and reports filed by Client with the United States Securities and
Exchange Commission, its most recent annual report to shareholders, any share
offerings, either registered or unregistered, and shall also provide any other
public information reasonably requested by Consultant. Client shall not
provide to Consultant any confidential or nonpublic information concerning
Client, and any and all information concerning client provided to Consultant by
Client shall be deemed nonconfidential and public.
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3. TERM. The term of this Agreement shall be for a period of
one (1) year, commencing on the date hereof and terminating on December 31,
1997, unless terminated earlier pursuant to Paragraph 4 below. The Client and
Consultant may mutually agree to extend the Agreement for additional periods.
In the absence of such an agreement, this Agreement shall automatically
terminate upon the Expiration Date.
4. TERMINATION.
(a) If Consultant, or any of its employees, agents or
representatives (i) is convicted of a felony, a crime of moral turpitude,
dishonesty, breach of trust or unethical business conduct, (ii) engages in
willful misconduct, willful or gross neglect, fraud, misappropriation or
embezzlement in the performance of its duties hereunder or otherwise to the
detriment of Client; or (iii) breaches in any material respect the terms and
provisions of this Agreement and fails to cure such breach within ten (10) days
following written notice from the Client specifying such breach; then Client
may terminate this Agreement hereunder on written notice given to Consultant at
any time not less than three (3) days following the occurrence of any of the
events described in clauses (i) through (iv) above.
(b) If Client, or any of its officers or directors (i) is
convicted of a felony, a crime of moral turpitude, dishonesty, breach of trust
or unethical business conduct, (ii) engages in willful misconduct, willful or
gross neglect, fraud, misappropriation, or misrepresentation or failure to
disclose information as required hereunder to the detriment of Consultant; or
(iii) breaches in any material respect the terms and provisions of this
Agreement and fails to cure such breach within ten (10) days following written
notice from the Consultant specifying such breach; then Consultant may
terminate this Agreement hereunder on written notice given to Client at any
time not less than three (3) days following the occurrence of any of the events
described in clauses (i) through (iv) above.
5. SERVICES TO BE PROVIDED BY CONSULTANT
(a) Consultant shall provide through December 31, 1997, unless
otherwise extended or terminated pursuant to the provisions herein,
consultation to Client as requested by the Client in consideration of the
compensation provided under this Agreement.
(b) Consultant shall further exercise its best efforts to
coordinate with Client management the process by which a concise and
comprehensive strategy for the ongoing development of the Client is planned,
which plan may include recommendations for the acquisition of new business
elements or components, or divestiture of existing ones. Consultant shall use
its knowledge of market conditions and the terms of general investor public
acceptance to advise Client in the development of such strategy.
(c) Consultant shall further exercise its best efforts to identify
and establish appropriate informational channels and networks capable of
maximizing dissemination of Client Information to licensed brokers and dealers
in jurisdictions where the Client's common stock has been legally qualified for
secondary trading. Consultant shall also exercise its best efforts to assemble
and organize Client Information in a format and medium which best facilitates
dissemination through
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such channels and networks, and shall further exercise its best efforts to
instigate and facilitate such dissemination.
(d) Consultant agrees to perform its duties hereto as an
independent contractor. Nothing contained herein shall be considered to create
the relationship of employer-employee between the parties to this Agreement.
Client shall not be liable to third parties for the acts of Consultant or its
servants or agents in performing its duties hereunder, except in the case of
damages or injuries caused directly by Client's agents or employees, or if
Consultant shall have been acting on behalf of Client. Client shall not make
social security, workers' compensation or unemployment insurance payments on
behalf of Consultant.
(e) It is acknowledged by Client that Consultant carries no
professional licenses and is not rendering legal advice or performing
accounting services, nor acting as an investment advisor or broker-dealer
within the meaning of applicable state and federal securities laws.
6. WARRANTIES AND REPRESENTATIONS OF CONSULTANT.
(a) Neither the entering into nor the delivery of this Agreement
nor the completion of the transaction contemplated hereby by Consultant will
result in the violation of: (i) any agreement to which Consultant is a party or
by which Consultant is bound and (ii) any applicable law, including but not
limited to, federal and state securities laws.
(b) Consultant and its personnel shall comply with all applicable
statutes, rules and regulations governing all aspects of the services to be
performed under this Agreement.
(c) Neither Consultant, its employees, agents or officers (or any
other person serving in a similar capacity):
(i) Has been convicted within ten years prior hereto of
any crime or offense involving the purchase or sale of any security; involving
the making of a false statement with the Securities and Exchange Commission
("Commission"); or has been convicted or charged with a crime or offense
arising out of Consultant engaging in the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser.
(ii) Is subject to any order, judgment or decree of any
court of competent jurisdiction temporarily or permanently enjoining or
restraining such person from engaging in or continuing any conduct or practice
in connection with the purchase or sale of any security; involving the making
of a false statement with the Commission; or has been convicted or charged with
a crime or offense arising out of such person engaging in the business of an
underwriter, broker, dealer, municipal securities dealer, or investment
adviser.
(iii) Is subject to an order of the Commission entered
pursuant to Section 15 (b) , 15B (a) , or 15B (c) of the Exchange Act; has been
found by the Commission to be a cause of any such order which is still in
effect; or is subject to an order of the Commission entered pursuant to Section
203(e) or (f) of the Investment Advisers Act of 1940.
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(iv) Is subject to a United States Postal Service fraud
order or is subject to any restraining order or preliminary injunction entered
under Section 3007 of Title 39, United States Code, with respect to any conduct
alleged to constitute postal fraud.
7. WARRANTIES AND REPRESENTATIONS OF CLIENT.
(a) Client has good and sufficient corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by Client and,
assuming due authorization, execution and delivery by Client, constitutes the
legal, valid and binding obligation of Client enforceable against Client in
accordance with its terms.
(b) Neither the entering into nor the delivery of this Agreement
nor the completion of the transaction contemplated hereby by Client will result
in the violation of: (i) any of the provisions of Client's charter documents,
(ii) any agreement to which Client is a party or by which Client is bound and
(iii) any applicable law.
(c) Client will make available to Consultant, upon Consultant's
request, any and all information regarding Consultant, which Consultant deems
necessary in order to perform his obligations under this Agreement.
8. COMPENSATION. In consideration of the services to be
rendered hereunder, and subject to the Consultant's full and faithful
performance of its obligations hereunder throughout the entire term of this
Agreement, Client agrees to pay a $300,000 flat fee to consultant within five
business days after the expiration of the full term hereof. As additional
consideration hereunder, Client agrees to issue to Consultant, upon execution
hereof, an option to purchase common stock of the Client substantially in the
form and substance of Exhibit "A" hereto. Notwithstanding anything to the
contrary herein, Client may withhold payment of all or any portion of the
$300,000 flat fee if the Board of directors of the Client determines in good
faith that the fair market value of the services actually rendered by
Consultant hereunder is substantially less than $300,000.
9. REIMBURSEMENT FOR EXPENSES. Consultant shall be entitled to
be reimbursed by Client for reasonable out-of-pocket expenses incurred by
Consultant in performing the services agreed to under this Agreement, upon
submission by Consultant to Client of vouchers supporting such expenditures.
However, notwithstanding the foregoing, in no event shall Consultant incur any
expenses, either singularly or in the aggregate, on behalf of Client hereunder
in excess of $250 without the prior written consent of Client.
10. SUCCESSORS; AFFILIATES. This Agreement shall inure to the
benefit of and be binding upon Client, its successors and assigns, including,
without limitation, any person, partnership or corporation which may acquire
all or substantially all of Client's assets in business, or with or into which
Client may be consolidated, merged or otherwise reorganized, and this provision
shall apply in the event of any subsequent merger, consolidation,
reorganization, or transfer. Consultant may transfer or assign this Agreement
or any of the rights granted hereunder to an entity owned completely by
Consultant, provided such transfer or assignment does not violate any applicable
law
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and such assignment does not relieve Consultant of his obligations hereunder
and any costs shall be borne by Consultant.
11. SEVERABILITY. Consultant acknowledges and agrees that it has
had an opportunity to seek advice of counsel in connection with this Agreement.
If it is determined that any of the provisions of this Agreement, or any part
thereof, is invalid or unenforceable, the remainder of the provisions of this
Agreement shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
12. NOTICE AND WAIVERS. Any notice, waiver, demand or other
communication required or permitted by this Agreement must be in writing and
shall be deemed to have been given and received (i) if delivered by messenger,
when delivered, or (ii) if mailed, on the third business day after deposit in
the United States mail, certified or registered postage prepaid, return receipt
requested, (iii) if faxed, telexed or telegraphed, six hours after being
dispatched by fax, telegram or telex; in every case addressed to the party to
be notified as follows:
If to Consultant:
Xxxx Xxxxx
c/x Xxxxx & Associates Consulting, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone #(000) 000-0000
Facsimile #(000) 000-0000
Attention: Xx. Xxxx Xxxxx, President
If to Client:
Capitol Communities Corporation
00000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone #(000) 000-0000
Facsimile #(000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxx, President
or to such other addresses as may be designated in writing by either of the
parties.
13. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
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14. WAIVER AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege nor any single or partial exercise of any such right, power or
privilege, preclude any other further exercise thereof or the exercise of any
other such right, power or privilege.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to principles of conflicts of law.
16. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts together shall constitute one
and the same instrument. Each counterpart may consist of two copies hereof
each signed by one of the parties hereto.
17. HEADINGS. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only
and shall not affect the construction or interpretation of any of its
provisions.
IN WITNESS WHEREOF, Client and Consultant have executed this Agreement on the
date first written above.
Consultant:
By: /s/ Xxxx Xxxxx
Client:
Capitol Communities Corporation
By: /s/ Xxxxxxx X. Xxxx, President
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EXHIBIT A
STOCK OPTION AGREEMENT
AGREEMENT is made this 7th day of October, 1996 by and between Xxxx
Xxxxx (hereinafter referred to as "Consultant"), and Capitol Communities
Corporation (hereinafter referred to as the "Corporation").
WHEREAS, Consultant is an important and valuable consultant to the
Corporation, and the Corporation deems it to be in its interest to secure the
services of Consultant for the Corporation or such of its subsidiary companies
as may be designated by the Corporation; and,
WHEREAS, the Corporation desires to enter into this Agreement with
Consultant containing the terms and conditions hereinafter set forth and to
grant him an option to purchase shares of the Common Stock of the Corporation;
NOW THEREFORE, in consideration of the promises and the mutual
agreements hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. Grant of Option. In consideration of the foregoing, the
Corporation hereby grants to Consultant the right and option (hereinafter
referred to as "the options"), to purchase five hundred thousand (500,000)
shares of the Corporation's Common Stock ("Shares") at prices as defined by
Attachment A hereto. This option is granted pursuant to the terms and
conditions of the Financial Consultant Agreement between Capitol Communities
Corporation and Xxxx Xxxxx dated the 7th of October, 1996.
2. Method of Exercising Options. The options may be exercised in
whole at any time after the permitted exercise date hereunder or in part from
time to time (but only in multiples of 25,000 shares unless such exercise is as
to the remaining balance of this option), by giving to the Corporation notice
in writing to that effect. The options evidenced hereby shall be exercisable
by the delivery to and receipt by the Consultant (i) a written notice of
election to exercise in the form set forth in Attachment B hereto, specifying
the number of shares to be purchased; (ii) accompanied by the payment of the
full purchase price thereof in cash or certified check payable to the order of
the Corporation. Notwithstanding the foregoing or anything else herein to the
contrary, (a) Consultant may, at his option, pay the purchase price for any
stock purchased hereunder by offsetting the cash purchase price payable
hereunder against any documented amounts owed to Consultant by the Corporation
regardless of when such amounts might otherwise be payable, and (b) Consultant
may not exercise any of the options hereunder prior to the effective date of
the Company's Current Report filed on SEC Form 8-K concerning the consulting
agreement and any other matters that the Corporation may deem appropriate for
inclusion to such report.
3. Restriction Against Assignment. Except as otherwise expressly
provided above, Consultant agrees on behalf of itself and of any other person
or persons claiming any benefits by virtue of this Agreement, that this
Agreement and the rights, interest and benefits under it shall not be assigned,
transferred, pledged or hypothecated in any way by Consultant or any other
person
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claiming under Consultant by virtue of this Agreement. Such rights, interests
or benefits shall not be subject to execution, attachment or similar process.
Any attempted assignment, transfer, pledge, hypothecation, or other disposition
of this Agreement or of such rights, interests, and benefits contrary to the
preceding provisions, or the levy of any attachment or similar process
thereupon, shall be null and void and without effect.
4. Notices. Any notice to be given by Consultant as required by
this Agreement shall be sent to the Corporation at its principal executive
offices and any notice from the Corporation to Consultant shall be sent to
Consultant at its address as appears on the Corporation's books and records.
Either party may change the address to which notices are to be sent by
informing the other party in writing of the new address.
5. Expiration. The Stock Option Agreement shall expire at 12:00
P.M. Pacific Standard Time on December 31, 1997, unless the Financial
Consultant Agreement is terminated earlier pursuant to its Paragraph 4. Upon
expiration of the Stock Option Agreement, any options not then exercised shall
be canceled and thereafter be null and void, unless the Stock Option Agreement
is extended, which shall only be by written instrument signed by the Client
prior to the expiration of the Stock Option Agreement
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer as of the date first written above.
Capitol Communities Corporation
By: /s/ Xxxxxxx X. Xxxx, President
ATTEST:
By: /s/ Xxxxxx Xxxxxxxx, Secretary
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ATTACHMENT A
PRICE NUMBER NET TO PERMITTED
PER SHARE OF SHARES CAPITOL EXERCISE DATE
--------- --------- ------- -------------
$2.00 200,000 $400,000 Form 8-K
$2.50 50,000 125,000 Form 8-K
$2.75 50,000 137,500 Form 8-K
$3.00 50,000 150,000 Dec. 6, 1996
$3.25 50,000 162,500 Dec. 6, 1996
$3.50 50,000 175,000 Feb. 6, 1997
$4.00 50,000 200,000 Feb. 6, 1997
------ -------
TOTAL 500,000 $1,350,000
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ATTACHMENT B
NOTICE OF EXERCISE
TO: CAPITOL COMMUNITIES CORPORATION
1. The undersigned hereby elects to purchase __________________
shares of Common Stock of Capitol Communities Corporation pursuant to the terms
of the attached Stock Option Agreement, and tenders herewith payment of the
purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
____________________________________________
(Name)
____________________________________________
____________________________________________
(Address)
____________________________________________
(Social Security or Tax I.D. Number)
3. I acknowledge that I have received no formal prospectus or
offering memorandum describing the business and operations of the Company. I
have, however, by virtue of my involvement with the Company, been given access
to all information that I believe is material to my decision to exercise the
stock option referred to above. I have had the opportunity to ask questions
of, and receive answers from, representatives of the Company concerning its
business operations. Any questions raised by me have been answered to my
satisfaction.
Date:_____________________, 19____
__________________________________
Purchaser
Fax to: Xxxxxxx X. Xxxx, Capitol Communities Corp., (000) 000-0000
Xxxx Xxxxxxx, Olde Monmouth Stock Transfer, (000) 000-0000
