XXXXXXXXX GROUP CORPORATE DEVELOPMENT AGREEMENT
This Agreement (the "Agreement") is entered into as of this 30th day of
July, 1997, by and between The Xxxxxxxxx Group, Inc., a Nevada corporation
("Michelson"), with its principal place of business at 0000 Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx Xxxxx, XX 00000, and American Custom Components with its principal
place of business at 0000 X. Xxxxxxx Xx., Xxxxxxx, XX 00000 (the "Company").
RECITALS
WHEREAS, Company intends to be a public company which is required to
file periodic and other reports under section 13 or 15(d) of the Securities
Exchange Act of 1934 and envisions that it will need the services of corporate
development activities of Xxxxxxxxx; and
WHEREAS, Company desires to engage Xxxxxxxxx to perform corporate
development services on behalf of Company; and
WHEREAS, Xxxxxxxxx has the ability and knowledge necessary for the
performance of such services; and
WHEREAS, Xxxxxxxxx and Company desire, pursuant to the terms of this
Agreement, to set forth the terms and conditions pursuant to which Xxxxxxxxx
will perform corporate development services on behalf of Company.
WHEREAS, as used herein, "Applicable Date" means August 15, 1997 if
Xxxxxxxxx does not terminate this Agreement as provided in Section 1.2.6.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and adequate consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
SCOPE OF SERVICES
1.1 Xxxxxxxxx agrees to perform for the Company the corporate development
services describe as follows:
1.1.1 REFERRALS; KEY EMPLOYEES. Xxxxxxxxx shall advise the Company on
the selection of professionals and Company agrees to meet and
retain such professionals provided that the compensation to such
professionals is at or less than market rate and that such
professionals and their compensation are mutually agreed upon by
the Company and Xxxxxxxxx. Company will name one designee of
Xxxxxxxxx to its Board of Directors and recommend said designee to
its shareholders for election as a director at future shareholder
meetings of the Company. Xxxxxxxxx recognizes that the
shareholders may not cast their votes for such designee and such
failure shall not constitute a breach of this Agreement.
1.1.2 STOCK OPTION PLAN. Xxxxxxxxx recognizes that having management own
a significant ownership position in the Company is a valuable tool
for focusing their attention on increasing shareholder value.
Accordingly, Xxxxxxxxx recommends that the Board of Directors put
into effect within the next 12 months a stock option plan to be
used for acquiring additional management as well as incentivizing
current management if one is not already in effect.
1.1.3 CAPITALIZATION. Xxxxxxxxx shall make all reasonable efforts to
help Company reach the business objectives to be mutually agreed
upon at a later date.
1.1.4 THE SUPPORT SYSTEM. Xxxxxxxxx will develop, implement and maintain
an ongoing stock market support system with the general objective
of expanding stockbroker awareness of the Company's activities,
and hence to generate commensurate interest in the Company's
stock.
1.2 Company acknowledges as follows:
1.2.1 NO GUARANTEES. Xxxxxxxxx makes no guarantees, representations or
warranties as to the particular results from Xxxxxxxxx corporate
development services, the response and timeliness of action by the
stockholder and brokerage community, including but not limited to
guarantees, representations or warranties as to fixture stock
price of Company.
1.2.2 REVIEW RESPONSIBILITY. Company understands that the accuracy and
completeness of any document prepared by Xxxxxxxxx or its advisers
is dependent upon Company's alertness to assure that such document
contains all material facts which might be important and that all
such documents must not contain any misrepresentation of a
material fact nor omit information necessary to make the
statements therein not misleading. To that end, Company agrees to
review, and confirm to Xxxxxxxxx in writing that you have
reviewed, all materials for their accuracy, and completeness prior
to any use thereof. Company also acknowledges that this
responsibility continues in the event that the materials become
deficient in this regard.
1.2.3 REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to Xxxxxxxxx that all information provided prior to the
execution of this Agreement, in writing or otherwise, is true and
complete. In the event that such information is determined to be
inaccurate, incomplete or otherwise misleading, this Agreement may
be immediately terminated, at the sole discretion of Xxxxxxxxx.
1.2.4 ISSUANCE OF ADDITIONAL SECURITIES/INDEBTEDNESS. Commencing with
the execution of this Agreement and ending two years from the date
of the Agreement, the Company will not issue any additional
securities (except Securities issued in connection with the
currently proposed private securities offerings and Securities
issuable upon the exercise or conversion of existing warrants,
options or other convertible securities, or those issuable upon
presently existing employee stock option plans) or incur and
additional indebtedness (except in the ordinary course of business
of to an aggregate of $100,000.00) without the prior written
consent of Xxxxxxxxx.
1.2.5 OFFICER COMPENSATION. Commencing with the execution of this
Agreement and ending two years from the date of the Agreement, no
offer or director of the Company will receive more that $____.00
per month in cash compensation without the prior written consent
of Xxxxxxxxx. It is contemplated that the officers of the Company
will participate in the stock compensation plan, the terms of
which will be mutually agreed upon by the Parties.
1.2.6 The contract is subject to Xxxxxxxxx completing its due diligence
by August 15, 1997. If Xxxxxxxxx is not satisfied for any reason,
Xxxxxxxxx may terminate this contract with no obligation to
Xxxxxxxxx by August 15, 1997.
ARTICLE II
COMPENSATION FOR SERVICES
2.1 In consideration for entering into this Agreement and performing the
services described immediately above, Company agrees to compensate
Xxxxxxxxx as follows:
2.1.1 CASH COMPENSATION. Company agrees to pay to Xxxxxxxxx a monthly
fee of $6,000.00, to be paid on the 1st of each month beginning
upon execution of this agreement. Xxxxxxxxx agrees to defer
payment of fees to be paid when the company breaks escrow on it's
bridge financing.
2.1.2 STOCK COMPENSATION. Commencing on the Applicable Date, Company
agrees to issue to Xxxxxxxxx warrants to purchase that number of
shares of common stock of the Company (the "Warrants") which
would, upon exercise, result in Xxxxxxxxx holding of 7.0% of the
outstanding shares of the Company upon completion of the proposed
bridge financing and reverse merger. Such Warrants shall be
exercisable for a period of five years from the Applicable Date at
an initial price of $.01 per share. The Company shall execute and
deliver a customary Warrant Agreement evidencing the Warrants.
Xxxxxxxxx acknowledges that the Warrants and the shares issuable
upon exercise of the Warrants (the "Shares") will initially be
"restricted securities" (as such term is define in Rule 144
promulgated under the Securities Act of 1933, as amended ("Rule
144"), that the Warrants and Shares will include a restrictive
legend, and that the Warrants and Shares cannot be sold unless
registered with the United States Securities and Exchange
Commission ("SEC") and qualified by appropriate state securities
regulators, or unless Xxxxxxxxx complies with an exemption from
such registration and qualification (including without limitation,
compliance with Rule 144).
Company shall issue the stock certificate for the Shares within
five (5) days after the exercise of any Warrants.
Within 30 days of any shares of the Company becomes publicly
traded, the Company will use its best efforts to cause all the
Shares (whether or not the Warrants have been exercised) to be
registered under the Securities Act of 1933 on Form 5-8 or other
appropriate form, all the extent requisite to permit the sale of
other disposition by the prospective sellers of the shares of
Common Stock so registered.
Company agrees to issue to Xxxxxxxxx 350,000 warrants upon
execution date of this contract. Company will issue an additional
350,000 warrants to Xxxxxxxxx when Company reaches a $30 million
public market valuation for sixty (60) days.
2.1.3 ANTIDILUTION. It is the intention of the parties hereto that upon
completion of the bridge financing, the number of warrants to be
held by Xxxxxxxxx shall equal 7.0% of the then issued and
outstanding shares of stock. This 7.0% is to be calculated on a
fully diluted basis assuming that the entire bridge financing and
reverse merger is completed. The Company agrees that it shall
issue additional warrants to Xxxxxxxxx, if necessary, in order to
assure that Xxxxxxxxx receives this 7.0%. Xxxxxxxxx shall be
diluted in the same manner that all other shareholders of the
Company are diluted, in all offerings occurring subsequent to the
completion proposed bridge financing.
2.1.4 EXPENSES. Company agrees to pay all incidental costs and expenses
associated with services provided by Xxxxxxxxx, such costs to be
covered by funds including but not limited to funds in the Escrow
Account in excess of funds needed to pay Xxxxxxxxx'x monthly fees.
Such expenses are separate from cash compensation as set out
above, and include but not limited to such incidental costs and
expenses as travel and lodging, copying charges, printing charges,
long distance telephone charges, facsimile charges, postage,
special mailings and other reasonable expenses. Such expense shall
in every instance be reasonable and verifiable with appropriate
back-up documentation.
ARTICLE III
TERM OF THE AGREEMENT
3.1 This Agreement shall commence upon execution of this Agreement and
continue during the two year period of time following the date of this
Agreement. Renewal shall be determined by a vote of the Board of
Directors of the Company. Notwithstanding the foregoing, the Company or
Xxxxxxxxx, as the case may be, may terminate this Agreement immediately
upon written notice to such party upon the occurrence of any of the
following: (a) the other party shall become insolvent or make an
assignment for the benefit of Creditors; and (b) the other party shall
breach any of the material terms of this Agreement. If this Agreement is
terminated on or before the termination date of this Agreement (as set
forth above) for any reason other than a default by Xxxxxxxxx, the
entire cash fee shall immediately become due and payable, shall be
deemed to be earned as of such date, and no offset, refund or reduction
of payments shall be attributable to such termination. The provisions of
Article II shall survive the termination of this Agreement.
ARTICLE IV
STATUS OF PARTIES
4.1 Nothing contained in this Agreement shall be construed to imply that
either Xxxxxxxxx, the Company, or any employee, agent or other
authorized representative of any such party, is a partner, joint
venturer, agent officer or employee of the other. Neither party hereto
shall have any authority to bind the other in any respect vis a vis any
third party, it being intended that each shall remain an independent
contractor and responsible only for its own actions. The Company and
Xxxxxxxxx are independent contractors, each responsible for its own
actions, costs and expenses. Neither Xxxxxxxxx nor the Company shall
have any right to, and shall not, commit the other party to any
agreement, contract, or undertaking or waive or compromise any of such
other party's rights against customers or other parties. All
compensation paid to Xxxxxxxxx shall constitute earnings from
self-employment income, and the Company shall not withhold any amounts
therefrom as federal or state income tax withholding from wages or as
employee contributions under the Federal Insurance Contribution Act
(Social Security) or any similar federal or state law applicable to
employers and employees.
ARTICLE V
INDEMNIFICATION
5.1 Company acknowledges that Xxxxxxxxx must at all times rely upon the
accuracy and completeness of information and documents supplied to
Xxxxxxxxx by the Company's officers, directors, agents and employees.
Consequently, Company and the entities affiliated with Company agree to
indemnify and hold harmless Xxxxxxxxx, its officers, directors,
employees and agents (collectively, the "Indemnitees") against and from
any and all losses, claims, damages or liabilities, joint or several,
which Indemnitees or any of them may become subject, and to reimburse
Indemnitees or any of them for any legal or other expenses (including
the cost of any investigation and preparation) incurred by Indemnitees
or any of them, arising out of or in connection with any inquiry,
litigation or other proceeding, whether or not resulting in any
liability, insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, (i) any act taken or omitted
to be taken by Indemnitee's services hereunder, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in
any information (written or oral) furnished by you to Indemnitees or the
omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading.
ARTICLE VI
CONFIDENTIALITY
6.1 Xxxxxxxxx agrees not at any time (during or after the term of this
Agreement) to disclose or use, except in pursuit of the business of the
Company (for purposes of this Article, "the Company" shall include the
Company and any affiliate of the Company), and Proprietary Information
of the Company acquired during the term of this Agreement. For Purposes
of this Agreement the phrase "Proprietary Information" means all
information which is known or intended to be known only to Xxxxxxxxx or
employees of the Company any document, record or other information of
the Company or others in a confidential relationship with the Company
and relates to specific business matters such as patents, patent
applications, trade secrets, secret processes, proprietary know-how,
information of the Company's business, and identity of suppliers or
customers or accounting procedures of the Company or relates to other
business of the Company. Xxxxxxxxx agrees not to remove from the
premises of the Company except in the pursuit of business of the Company
any document, record or other information of the Company. Xxxxxxxxx
recognizes that all such documents, records or other information,
whether developed by Xxxxxxxxx or by someone else for the Company are
the exclusive property of the Company, as the case may be.
ARTICLE VII
MISCELLANEOUS
7.1 WAIVER. No waiver of any breach of default of this Agreement by
Xxxxxxxxx shall be considered to be a waiver of any other breach or
default of this Agreement.
7.2 SEVERABILITY. If any portion of this Agreement is found by a court of
competent jurisdiction to be void or unenforceable, that portion hereof
shall be deemed to be reformed to the extent necessary to cause such
portion to be enforceable and the same shall not affect the remainder of
this Agreement, which shall be given full force and effect without
regard to the invalid or unenforceable portions.
7.3 ENTIRE AGREEMENT. This Agreement, which may be signed in duplicate or
counterparts, replaces and supersedes all previous Agreements between
Xxxxxxxxx and the Company, contains the entire understanding between the
parties, and may not be changed, altered, amended, or modified, except
in writing, duly executed by each of the parties.
7.4 ASSIGNMENT. This Agreement may not be assigned or transferred by either
party hereto without the prior written consent of the other.
7.5 GOVERNING LAW. This Agreement shall be governed by the laws of the State
of California.
7.6 ATTORNEY'S FEES. Should any action be commenced between the parties to
this Agreement concerning the matters set forth in this Agreement or the
right and duties of either in relation thereto, the prevailing party in
such action shall be entitled, in addition to such other relief as may
be granted, to a reasonable sum as and for its Attorney's Fees and
Costs.
7.7 ARBITRATION AND VENUE. Any controversy arising out of or relating to
this Agreement or any modification or extension thereof, including any
claim for damages and/or recision, shall be settled by arbitration in
Orange County, California in accordance with the Commercial Arbitration
Rules of the American Arbitration Association before one arbitrator. The
arbitrator sitting in any such controversy shall have no power to alter
or modify any express provisions of this Agreement or to render any
award which by-its terms effects any such alteration, or modification.
The parties consent to the jurisdiction of the Superior Court of
California, and of the United States District Court for the Central
District of California for all purposes in connection with such
arbitration including the entry of judgment on any award. The parties
consent that any process or notice of motion or other application to
either of said courts, and any paper in connection with arbitration, may
be served by certified mail or the equivalent, return receipt requested,
or by personal service or in such manner as may be permissible under the
rules of the applicable court or arbitration tribunal, provided a
reasonable time for appearance is allowed. The parties further agree
that arbitration proceedings must be instituted within one year after
the claimed breach occurred, and that such failure to institute
arbitration proceedings within such period shall constitute an absolute
bar or the institution of any proceedings and a waiver of all claims.
This section shall survive the termination of this Agreement.
7.8 FACSIMILE SIGNATURE. Any signature on a facsimile copy of the Agreement
shall be binding and valid as if made on the original copy of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first written above.
XXXXXXXXX GROUP, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx, President
"COMPANY"
By: /s/signature
--------------------------
Its: CEO
