CONSULTING AGREEMENT
AGREEMENT dated as of June 15, 2000 between Worldwide Entertainment &
Sports Corporation, a Delaware corporation having its principal offices located
at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 000 Xxxx Xxxxxx, Xxx Xxxxxx 00000 (the
"Corporation") and Xx. Xxxxx Xxxx or a corporation to be formed by Xx. Xxxx with
a principal office located at 1330 Avenue of the Americas, New York, New York
10019("Consultant").
WITNESSETH
Whereas, the Corporation and its subsidiaries, Xxxxxxxx.xxx, Inc. and
Worldwide Xxxxxxxxxxxxx.xxx, Inc. (the subsidiaries are collectively referred to
as the "Companies"); are engaged in the career management, professional
representation and contract negotiation for professional athletes and
professional teams and operating sports content internet companies and desire to
retain the Consultant to assist in their business operations on the terms set
forth herein (collectively, the "Corporation's Business"); and
Now, Therefore, in consideration of the premises and mutual agreements
set forth herein, the parties hereto agree as follows:
1. Consultant's Retention. The Corporation agrees to engage Consultant
as an independent consultant and Consultant agrees to serve, on the terms and
conditions of this Agreement for a period commencing on the date hereof and
ending on May 31, 2003, or such shorter period as may be provided for herein
(this period and any extensions thereof shall be referred to as the "Term"). The
Term of this Agreement shall be automatically extended (subject
to earlier termination as provided herein) for successive one year periods
unless at least 90 days prior to the end of the then current term, the
Corporation or Consultant has notified the other party in writing that
Consultant's engagement hereunder shall terminated at the end of such Term. The
period during which Consultant is engaged hereunder is hereinafter referred to
as the "Engagement Period". As used herein, the term "Engagement Year" shall
mean a one-year period of Consultant's engagement hereunder commencing on each
January 1 during the Engagement Period, provided that the first Engagement Year
shall be the period commencing on June 15, 2000 and ending on December 31, 2000
and the final Engagement Year of the Term shall end on May 31, 2003.
2. Consultant's Responsibilities and Services. Pursuant to this
Agreement, Consultant will do the following through its principal, Xx. Xxxxx
Xxxx(the "Principal")(collectively, the "Consultant's Work"):
(A) carrying out responsibilities assigned to the Consultant by the
Chief Executive Officer and Executive Vice President of the Corporation;
(B) analyzing all material aspects of the operations of Xxxxxxxx.xxx,
Inc. ("Sportcut"), and prepare recommendations regarding future business
strategy for Sportcut, including financing options, sale, joint venture or
strategic alliance prospects, revenue generating opportunities, and appropriate
staffing levels;
(C) proposing supplemental revenue opportunities for the Corporation or
the Companies in connection with the Corporation's Business and, if appropriate,
proposing new revenue opportunities for the Corporation and the Companies
subsidiaries, including potential acquisition candidates, with an emphasis upon
opportunities which offer the most likely prospect for
profitable results in the relative near future with reasonable capital
investments;
(E) working on a regular basis with the Chief Executive Officer of the
Corporation, the Executive Vice President of the Corporation and the In-House
General Counsel of the Corporation to seek to improve all material aspects of
the operations of the Corporation's Business with the objective of improving the
financial performance of the Corporation and its subsidiaries as expeditiously
as possible; and
(F) assist the Corporation in connection with any undertaking to raise
capital to support the operations of the Corporation and the Companies.
3. Independent Contractor. (A) In the performance of the Consultant's
Work hereunder, the Consultant shall at all times act strictly and exclusively
as an independent contractor and shall not be considered as having Consultant
status under any federal state or municipal law, regulation or ordinance or as
being entitled to participate in any benefit program established at any time by
the Corporation or any of the Companies for their respective Consultants. The
Consultant shall not have the authority to bind the Corporation or the
Companies, whether expressed or implied, in any way without prior consent of the
party being so bound. The authority of the Consultant shall not exceed that
expressly set forth in this Agreement, (B) and the Consultant shall provide the
Consultant's Work exclusively to the Corporation and its subsidiaries and shall
not act as a consultant to any other person, firm or corporation. The Consultant
shall devote such time to the Corporation's business as Consultant deems
necessary to fulfill his obligations hereender.
4. Compensation. As full compensation for Consultant's rendering the
services
hereunder, the Corporation shall pay Consultant during the Term:
a. Annual consultant fee of $175,000 during the first twelve months of
the Term;
b. Annual consultant fee of $200,000 during the second twelve months of
the Term;
c. Annual consultant fee of $225,000 during the third twelve months of
the Term, and with respect to all payments of the annual consultant's fee, they
shall be paid pro-rata monthly or bi-monthly or such other period as the
Corporation determines in the exercise of its reasonable discretion(the "Annual
Consultant's Fee").
4. Business Expenses.
(a) During the Engagement Period, Consultant shall be entitled to
reimbursement for all reasonable out-of-pocket expenses necessarily incurred in
the performance of its duties hereunder upon submission and approval of written
statements and bills in accordance with the then regular procedures of the
Corporation. Consultant shall be entitled to lease of an automobile and parking
for the Term at a monthly expense not to exceed $750 per month.
5. Stock Options. (a) Subject to the approval of the Board of Directors
of the Corporation, the Consultant shall be granted an option to purchase Two
Hundred Fifty Thousand (250,000) shares of the common stock of the Corporation
(the "Common Stock"), at an exercise price equal to $1.00 per share, exercisable
for a period of ten years from the date hereof (the "First Stock Options"). The
First Stock Options shall vest quarterly throughout the Engagement Period
pro-rata at the rate of 20,833 of the First Stock Options per quarter commencing
on the date hereof, (b) and subject to the approval of the Board of Directors of
the Corporation, Consultant shall be granted an option to purchase Two Hundred
Fifty Thousand (250,000) shares of the common stock of the Corporation at an
exercise price equal to $1.00 per share, exercisable for a period of ten years
from the date hereof (the "Second Stock Options"). The Second Stock Options
shall vest according to the following schedule:
i. 83,334 of the Second Stock Options shall vest when
the "Market Price
per Share" of a share of the Common Stock equals or
exceeds $3.00 per share for at least ten consecutive
days, each of which is a "Trading Day". For purposes
hereunder, "Market Price per Share" of a share of the
Common Stock shall mean, on any "Trading Day", any
reported sale price for Common Stock (regular way)
or, in case no such reported sale takes place on such
Trading Day, the average of any bid and asked prices
(regular way) for the Common Stock on such Trading
Day, in either case on the principal national
securities exchange on which the Common Stock is
listed or admitted to trading, or if the Common Stock
is not listed or admitted to trading on any national
securities exchange, but is traded in the
over-the-counter market, any sale prices of the
Common Stock on such Trading Day or, if no sale is
publicly reported, the average of any bid and asked
quotations for the Common Stock on such Trading Day,
as reported by Nasdaq or any comparable system, or,
if the Common stock is not listed on Nasdaq or a
comparable system, any sale price of the Common Stock
on such Trading Day or, if no sale is publicly
reported, the average of any bid and asked prices on
such Trading Day, as furnished by two members of the
National Association of Securities Dealers, Inc. who
make a market in the Common Stock selected from time
to time by the Corporation for that purpose. In
addition for purposes of such definition, a "Trading
Day: shall mean, if the Common Stock is listed on any
national securities exchange, a business day during
which
such exchange was open for trading and at least one
trade of Common Stock was effected on such exchange
on such business day, or, if the Common Stock is not
listed on any national securities exchange but is
traded in the over-the-counter market, a business day
during which the over-the-counter market was open for
trading and at least one "eligible dealer" quoted
both a bid and asked price for the Common Stock. An
"eligible dealer" for any day shall include any
broker-dealer who quoted both a bid and asked price
for such day, but shall not include any broker-dealer
who quoted only a bid or only an asked price for such
day.
ii. 83,333 of the Second Stock Options shall vest when
the Market Price Per Share of a share of Common Stock
equals or exceeds $6.00 per share for ten consecutive
days, each of which is a Trading Day;
iii. 83,333 of the Second Stock Options shall vest when
the Market Price Per Share of a share of Common Stock
equals or exceed $9.00 per share for ten consecutive
days, each of which is a Trading Day; and
(c) Consultant hereby acknowledges and agrees that the shares of the
Corporation's Common Stock issuable upon the exercise of the First Stock Options
and the Second Stock Options are not currently registered under the Securities
Act of 1933, as amended (the "Act"), and such securities may not be sold,
transferred, or otherwise disposed of in the absence of an effective
registration statement or an exemption from registration thereunder, and that
Rule 701 under the Act shall not be deemed a valid exemption from registration
under the Act with respect of the resale of the Corporation's Common Stock
acquired upon exercise of either the First Stock Options or the
Second Stock Options. The Corporation agrees that on or before the expiration of
twelve months from the date of this Agreement, it shall file a registration
statement with the Securities and Exchange Commission on Form S-8 to register
the Corporation's Common Stock underlying the First Stock Options and the Second
Stock Options.
6. Representation, Warranties and Covenants of Consultant. Consultant
represents and warrants to the Corporation that Consultant is under no
contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of its duties hereunder, or the
other rights of the Corporation hereunder and (b) the Principal of Consultant is
under no physical or mental disability that would hinder his performance of
duties on behalf of the Consultant under this Agreement.
7. Non-Competition.
(a) In view of the unique and valuable services it is expected
Consultant will render to the Corporation, and in consideration of the
compensation to be received hereunder, Consultant agrees (i) that it will not,
during the period it is engaged by the Corporation under this Agreement or
otherwise, Participate In (as defined below) any other business or organization,
whether or not such business or organization now is or shall then be competing
with or of a nature similar to the business or profession of the Corporation or
any of the Companies, and (ii) for a period of one year after it ceases to be
engaged by the Corporation under this Agreement as a result of Consultant's
voluntary termination of this Agreement (not including a termination of this
Agreement by the Corporation without cause), Consultant will not compete with or
be engaged in the same business as or Participate In any other business or
organization which during such one year period competes with or is engaged in
the same business as the Corporation or any of the Companies with respect to any
product or service sold or proposed to be sold or activity engaged in or
proposed to be engaged in up to the time of such cessation except that in each
case the provisions of this Section 7 will not be deemed breached merely because
Consultant owns not more than 2% of the outstanding common stock of a
Corporation, if, at the time of its acquisition by Consultant, such stock is
listed on a national securities exchange, is reported on Nasdaq, or is regularly
traded in the over-the-counter market by a member of a national securities
exchange. As used in this Agreement, the term "Participate In" shall mean:
"directly or indirectly, for his own benefit or for, with, or through any other
person, firm, or Corporation, own, manage, operate, control, loan money to, or
participate in the ownership, management, operation, or control of, or be
connected as a director, officer, Consultant, partner, consultant, agent,
independent contractor, or otherwise with, or acquiesce in the use of his name
in."
(b) Consultant will not directly or indirectly reveal the name
of, solicit or interfere with, or endeavor to entice away from the Corporation
or any of the Companies any of its respective employees. Consultant will not
directly or indirectly employ any person who is an employee of the Corporation
or any of the Companies for a period of one year after this Consulting Agreement
is terminated.
(c) Since a breach of the provisions of this Section 7 could
not adequately be compensated by money damages, the Corporation shall be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach or a threatened breach, and in either case no
bond or other security shall be required in connection therewith, and Consultant
hereby consents to the issuance of such injunction. Consultant agrees that the
provisions of this Section 7 are necessary and reasonable to protect the
Corporation or any of the Companies in the conduct of
their respective businesses. If any restriction contained in this Section 7
shall be deemed to be invalid, illegal, or unenforceable by reason of the
extent, duration, or geographical scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby.
8. Confidential Information. All confidential information which
Consultant may now possess, may obtain during or after the Engagement Period, or
may create prior to the end of the period it is engaged by the Corporation under
this Agreement or otherwise relating to the business of the Corporation or any
of the Companies shall not be published, disclosed, or made accessible by him to
any other person, firm, or Corporation either during or after the termination of
its engagement or used by it except during the Engagement Period in the business
and for the benefit of the Corporation and the Companies, in each case without
prior written permission of the Corporation. Consultant shall return all
tangible evidence of such confidential information to the Corporation prior to
or at the termination of its engagement.
9. Termination.
(a) Notwithstanding anything herein contained, if, prior to
the end of the Engagement Period:
(1) either (i) Principal shall be physically or mentally
incapacitated or disabled (as determined by an independent physician
selected by the Board of Directors of the Corporation) or otherwise
unable fully to discharge his duties on behalf of the Consultant
hereunder for a period of six consecutive weeks or an aggregate of
six(6) weeks in any twelve (12) month period, (ii) Principal shall be
convicted by, or shall have entered a plea of guilty or nolo contendere
in, a court of competent and final jurisdiction for any crime involving
moral turpitude, fraud, embezzlement, misappropriation, or any other
felony or crime punishable by imprisonment, (iii) Principal shall
commit any act of fraud,
embezzlement or other act of misappropriation, (iv) Principal or
Consultant shall fail or refuse to perform in any material respect its
duties as required hereunder or shall refuse to follow direct
instructions from the Board of Directors of the Corporation or
otherwise shall breach any term of this Agreement and fail to correct
such breach within twenty (20) days after the commission thereof, then,
in each such case, the Corporation shall have the right to give notice
of termination of Consultant's services hereunder as of a date (not
earlier than ten days from such notice) to be specified in such notice,
and this Agreement shall terminate on the date so specified; or
(2) Principal shall die, then this Agreement shall terminate
on the date of Principal's death;
(b) Upon termination of this Agreement
pursuant to subsection (a)(1)(i) or (a)(2) of this Section 11,
neither party shall have any further obligations hereunder
except that (i) Consultant (or Principal's estate in the event
of Principal's death), shall be entitled to receive the
portion of the earned Annual Consultant's Fee which shall not
have previously been paid to the date of termination and (ii)
both parties shall remain liable for obligations and covenants
contained herein that extend beyond the Term of this
Agreement.
(c) Upon termination of this Agreement as a
result of Consultant's voluntary action or pursuant to
subsections (a)(1)(ii), (a)(1)(iii) or (a)(1)(iv) of this
Section 11, neither party shall have any further obligations
hereunder except (i) Consultant shall be entitled to receive
that portion of the earned Annual Consultant's Fee which shall
not have previously been paid to the date of termination, and
(ii) for obligations or covenants contained herein that extend
beyond the Term of this Agreement.
(d) In the event this Consultant's Agreement
is terminated during the Term of this Agreement other than by
Consultant's voluntary action or pursuant to subsections
(a)(1) or (a)(2) of this Section 11, neither party shall have
any further obligations hereunder except (i) Consultant shall
be entitled to receive (i) the portion of the earned Annual
Consultant's Fee which shall not have
previously been paid to the date of termination and (ii) for
obligations or covenants contained herein that extend beyond
the Term of this Agreement.
10. Survival. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive the
termination of this Consulting Agreement.
11. Modification. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
12. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given at the address of such party set forth in the preamble to this
Agreement (or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 14). Notice to the estate of
Principal shall be sufficient if addressed to Consultant as provided in this
Section 14. Any notice or other communication given by certified mail (or such
comparable method) shall be deemed given at the time of certification thereof
(or comparable act), except for a notice changing a party's address which shall
be deemed given at the time of receipt thereof.
13. Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14. Binding Effect. Consultant's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to commutation, encumbrance, or the claims of Consultant's
creditors, and any attempt to do any of the foregoing shall be void. The
provisions of this Agreement shall be binding upon and inure to the benefit of
Consultant and its officers and directors and shall be binding upon and inure to
the benefit of the Corporation and its successors and assigns.
15. No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement (except as provided in Section 16).
16. Headings. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
17. Counterparts; Governing Law. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to conflict of laws.
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement as of the date first set forth above.
WORLDWIDE ENTERTAINMENT &
SPORTS COPORATION
By:
-------------------------------------
Name:
Title:
XX. XXXXX XXXX
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