Exhibit 10.5
CONSULTING AGREEMENT (M&A)
THIS CONTRACT PROVIDES FOR BINDING ARBITRATION OF ANY AND ALL
DISPUTES BETWEEN THE PARTIES UNDER THE FEDERAL ARBITRATION ACT
RECITALS
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into effective
the date it is signed by the last to sign as set forth below by and between
JACOB INTERNATIONAL, INC., A Wyoming Corporation, (the "Consultant"); whose
principal place of business is 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, XX
00000-0000 and PARADIGM ADVANCED TECHNOLOGIES, INC. (hereinafter referred to as
"Client"), whose principal place of business is 0 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0 (Tel: 000-000-0000; Fax 000-000-0000; email:
xxx.xxxxxxxxx.xxx/xxxx).
WHEREAS, Consultant provides management consulting services for mergers,
acquisitions, fund raising and investor relations, and its affiliate, Rapid
Release Research, LLC., provides shareholder information and public relations,
by and through itself and/or its subsidiary or affiliated enterprises (all
referred to as "Consultant") which have personnel knowledgeable and experienced
in utilizing electronic communications such as internet chat rooms, multi-party
conference calls and audio-video media; and
Whereas, Consultant and its affiliate, Rapid Release Research, LLC., have
heretofore assisted Client in obtaining shareholder and investor awareness,
investment opportunities and raising funds; and,
WHEREAS, the Client deems it to be in its best interest to retain Consultant to
render to the Client such services as may be needed; and
WHEREAS, Consultant is ready, willing and able to render such consulting and
advisory services to the Client as hereinafter described on the terms and
conditions more fully set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
in this Agreement, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows.
1. CONSULTING SERVICES. The Client hereby retains the Consultant as a business
consultant and public relations counsel to the Client and the Consultant hereby
accepts and agrees to such retention. The Consultant shall render to the Client
such services as set forth on Exhibit A, attached hereto and by reference
incorporated herein.
It is acknowledged and agreed by the Client that Consultant carries no
professional licenses, other than any that may be listed on Exhibit A; and is
not agreeing to act as a market-maker or render legal advice or perform
accounting services, nor act as an investment advisor or broker-dealer within
the meaning of applicable state and federal securities laws. It is further
acknowledged and agreed by the Client that the services to be provided to the
Client hereunder are presently not
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contemplated to be rendered in connection with the offer and sale of Securities
in a capital raising transaction; although Client may request services of
Consultant therefor and have reached a basis for compensation if such services
regarding Transactions are rendered. The services of Consultant shall not be
Exclusive nor shall Consultant be required to render any specific number of
hours or assign specific personnel to the Client or its projects.
2. INDEPENDENT CONTRACTOR. Consultant agrees to perform its consulting duties
hereto as an independent contractor. Nothing contained herein shall be
considered as creating an employer-employee relationship between the parties to
this Agreement. The Client shall not make social security, workers' compensation
or unemployment insurance payments on behalf of Consultant. The parties hereto
acknowledge and agree that Consultant cannot guarantee the results or
effectiveness of any of the services rendered or to be rendered by Consultant
hereunder. Rather, Consultant shall conduct its operations and provide its
services in a professional manner and in accordance with good industry practice.
Consultant will use its best efforts and does not promise results. Consultants
are affiliated with Pangea Petroleum Corporation (OTC:BB- "PAPO"), WHICH MAY BE
AN INTERESTED PARTY TO A MERGER OR ACQUISITION, and Client agrees that such
representation shall not be the basis of any claim of conflict of interest or
cancellation of any agreement between Client and Consultants and/or Pangea.
3. TIME, PLACE AND MANNER OF PERFORMANCE. The Consultant shall be available
for advice and counsel to the officers and directors of the Client at such
reasonable and convenient times and places as may be mutually agreed
upon. Except as aforesaid, the time, place and manner of performance of the
services hereunder, including the amount of time to be allocated by the
Consultant to any specific service, shall be determined at the sole discretion
of the Consultant and Consultant may have services performed by and through its
subsidiary or affiliated enterprises, at its sole discretion.
4. TERM OF AGREEMENT. The term of this Agreement shall be Six (6) months
commencing on the date of this Agreement, both subject to prior termination as
hereinafter provided.
5. COMPENSATION AND EXPENSES. In full consideration of the services to be
provided for the Client by the Consultant as fully set forth in Exhibit "A", the
Client agrees to compensate Consultant in the manner set forth in Exhibit "B".
In addition, the Client shall reimburse the Consultant for all pre-approved
expenses and disbursements incurred by the Consultant on behalf of the Client in
connection with the performance of consulting services pursuant to this
Agreement. Consultant shall be solely responsible for all expenses and
disbursements anticipated to be made in connection with its performance under
this Agreement. Compensation is not to be prorated over the term of this
Agreement and is non-refundable; Provided, if Consultant is terminated for cause
as provided below, then the Compensation shall be prorated on a monthly basis.
6. DUTIES AND OBLIGATIONS OF CLIENT.
(a) Client shall furnish to Consultant such current information and data as
necessary for Consultant to understand and base its advice to the Client, and
shall provide such current information on a regular basis, including at a
minimum:
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(i) Financial Information:
Balance Sheet, Income Statement, Cash Flow Analysis and Sales
Projections; Officers and Directors Resumes or Curriculum Vitae; and,
(ii) Shareholder Information:
Shareholder(s) List; Debenture or Preferred Stock or Option or Warrant
Agreements which may affect the number of shares to be issued or outstanding.
(b) Client shall furnish Consultant with full and complete copies of all
filings with all Federal and States Securities Agencies, with full and complete
copies of all Shareholder Reports and Communications whether or not prepared
with assistance of Consultant; with all data and information supplied to any
Analyst, Broker/Dealer, Market-Maker, or any other member of the Financial
Community, including specifically most recently filed Form 10 or Form 15c2(11)
or Offering documents (such as 504; 505 or 506) or Private Placement Documents.
(c) Client will notify Consultant of any private or public offering of
securities, including S-8 or Regulation S or A, at least Ten (10) days prior to
making such an offering during the term of this Consulting Agreement.
(d) Client will not cause to be effected a change or split of the Client
stock during the terms of this Agreement without ten (10) days prior written
notice to Consultant.
(e) Client shall be responsible for advising Consultant of any information
or facts which would affect the accuracy of any prior data and information to
Consultant so that Consultant.
7. TERMINATION
(a) Without cause, Consultant's relationship with the Client hereunder may
be terminated at any time by mutual written agreement of the parties hereto.
(b) Without cause, this Agreement shall terminate upon the dissolution,
bankruptcy or insolvency of the Client.
(c) Without cause, and without excusing the Client's obligations under
Section 5 herein above. Consultant shall have the right and discretion to
terminate this Agreement should the Client violate any law, ordinance, permit or
regulation of any governmental entity, except for violations which either
singularly or in the aggregate do not have or will not have a material adverse
effect on the operations of the Client.
(d) Without cause, this Agreement may be terminated by either party upon
giving written notice to the other party if the other party is in default
hereunder and such default is not reasonably cured within fifteen (15) days
after written notice of such default.
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(e) For cause(s) as set forth below, this Agreement may be terminated by
Client after giving written notice specifically detailing all and any event(s)
of default to Consultant if such specified event(s) of default is not reasonably
cured within fifteen (15) days after receipt of written notice of such events of
default(s):
(i) Any willful breach of duty by Consultant;
(ii) Any material breach by Consultant of the obligations in Section 9;
(iii) Any material acts or events which inhibit Consultant from fully
performing its responsibilities under this Agreement in good faith.
8. WORK PRODUCT. It is agreed that all information and materials produced for
the Client shall be the property of the Consultant, free and clear of all claims
thereto by the Client, and the Client shall retain no claim of authorship
therein.
9. CONFIDENTIALITY. The Consultant recognizes and acknowledges that it has and
will have access to certain confidential information of the Client and its
affiliates that are valuable, special and unique assets and property of the
Client and such affiliates. The Consultant will not, during the term of this
Agreement, disclose, without the prior written consent or authorization of the
Client, any of such information to any person, for any reason or purpose
whatsoever. In this regard, the Client agrees that such authorization or consent
to disclose may be conditioned upon the disclosure being made pursuant to a
secrecy agreement, protective order, provision of statute, rule, regulation or
procedure under which the confidentiality of the information is maintained in
the hands of the person to whom the information is to be disclosed or in
compliance with the terms of a judicial order or administrative process.
10. CONFLICT OF INTEREST. Consultant and its affiliates shall be free to perform
services for other persons and receive compensation from third parties
therefore; Provided, Consultant shall disclose its involvement to Client and not
interfere with contracts of Client.
11. DISCLAIMER OF RESPONSIBILITY FOR ACTS OF THE CLIENT. The obligations of
Consultant described in this Agreement consist solely of the furnishing of
information and advice to the Client in the form of services. In no event shall
Consultant be required by this Agreement to represent or make management
decisions for the Client. All final decisions with respect to acts and omissions
of the Client or any affiliates and subsidiaries, shall be those of the Client
or such affiliates and subsidiaries, and Consultant shall under no circumstances
be liable for any expense incurred or loss suffered by the Client as a
consequence of such acts or omissions.
12. INDEMNIFICATION. The Client shall protect, defend, indemnify and hold
Consultant and its assigns and attorneys, accountants, employees, officers and
directors harmless from and against all losses, liabilities, damages, judgments,
claims, counterclaims, demands, actions, proceedings, costs and expenses
(including reasonable attorneys' fees) of every kind and character resulting
from, relating to or arising out of (a) the inaccuracy, non-fulfillment or
breach of any representation, warranty, covenant or agreement made by the
Client; or (b) any legal action,
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including any counterclaim, based on any representation, warranty, covenant or
agreement made by the Client herein; or (c) negligence or willful misconduct by
the Client.
The Consultant shall protect, defend, indemnify and hold harmless the Client
and its assigns and attorneys, accountants, employees, officers and directors
harmless from and against all losses, liabilities, damages, judgments, claims,
counterclaims, demands, actions, proceedings, costs and expenses (including
reasonable attorneys' fees) of every kind and character (except those based on
information supplied by the Client) resulting from, relating to or arising out
of (a) the inaccuracy, non-fulfillment or breach of any representation,
warranty, covenant or agreement made by the Consultant herein except those based
on information furnished by the Client or its representatives; or (b) any legal
action, including any counterclaim, based on any representation, warranty,
covenant or agreement made by the Consultant herein; or (c) negligent or willful
misconduct by the Consultant.
13. NOTICES. Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and delivered or sent by:
(a) Registered or Certified Mail to the principal office of the other
party, postage prepaid with return receipt requested deposited in a
proper receptacle of the United States Postal Service or its
successors. Said notice shall be addressed to the intended recipient.
A written notice sent in conformity with this provision shall be
deemed delivered as of the date shown "delivered" on the return
receipt; or,
(b) Transmitted by Prepaid Telegram or by Telephone Facsimile Transmission
if receipt is acknowledged by the addressee. Notice so transmitted by
telegram or facsimile transmission shall be effective only if receipt
of transmission is acknowledged by an appropriate machine or written
confirmation, and such notice shall be deemed effective on the next
business day after transmission; or,
(c) Notice given in any other manner shall be effective only if and when
proven to have been received by the addressee.
For purposes of notice, the address of each party shall be the address set
forth above; Provided, however, that each party shall have the right to
change his respective address for notices hereunder to another location(s)
within the continental United States by giving 30 days' written notice to
the other party in the manner set forth hereinabove.
14. WAIVER OF BREACH. Any waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by any party.
15. ASSIGNMENT. This Agreement and the rights and obligations of the Consultant
hereunder shall not be assignable without the written consent of the Client.
16. APPLICABLE LAW. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all suits and special proceedings
hereunder be construed in accordance
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with and under and pursuant to the laws of the State of Texas and that in any
action, special proceeding or other proceeding that may be brought arising out
of, in connection with or by reason of this Agreement, the laws of the State of
Texas shall be applicable and shall govern to the exclusion of the law of any
other forum, without regard to the jurisdiction on which any action or special
proceeding may be instituted.
17. SEVERABILITY. All agreements and covenants contained herein are severable,
and in the event any of them shall be held to be invalid by any competent court,
the Agreement shall be interpreted as if such invalid agreements or covenants
were not contained herein.
18. ENTIRE AGREEMENT. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all prior
understanding, agreements and negotiations between the parties (except signed
promissory notes or option agreements per prior agreements.)
19. WAIVER AND MODIFICATION. Any waiver, alteration, or modification of any of
the provisions of this Agreement shall be valid only if made in writing and
signed by the parties hereto. Each party hereto, may waive any of its rights
hereunder without effecting a waiver with respect to any subsequent occurrences
or transactions hereof.
20. BINDING ARBITRATION. As concluded by the parties hereto, any controversy
between the parties hereto involving any dispute or claim by, through or under,
or the construction or application of any terms, covenants, or conditions of
this agreement shall on the written request of one party served upon the other,
be submitted to arbitration, and such arbitration shall comply with and be
governed by the provisions of the Federal Arbitration Act as it may be amended;
Provided, that Arbitration shall be conducted in Xxxxxx County, Texas and be
conducted by the American Arbitration Association ("AAA"). The FAA rules shall
apply, and the AAA rules shall apply if not in conflict with the FAA rules. All
evidence shall be subject to the Federal Rules of Civil Evidence. There will be
three (3) Arbiters, one to be selected by Client and one to be selected by
Consultant. The two selected Arbiters will select a third Arbiter who will be an
attorney or former judge having been licensed for at least 5 years as an
attorney in Texas; and who shall be the administrator of the panel.
21. COUNTERPARTS AND FACSIMILE SIGNATURE. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party hereto shall constitute a
valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement, effective as of the date set forth above.
CLIENT: CONSULTANT:
PARADIGM ADVANCED TECHNOLOGIES, INC. JACOB INTERNATIONAL, INC.
BY: BY:
---------------------------- ----------------------------
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/s/ Xxxxxx Xxxxxx /s/ Xxxx X Xxxxxx
Xxxxxx Xxxxxx, Chief Financial Officer Xxxx X Xxxxxx, President
Its Authorized Officer Its Authorized Officer
Signed Date: 3/7/2000 Signed Date: 2/28/2000
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"EXHIBIT A"
Consultant shall provide services to Client as an independent management
consultant. Consultant shall make itself available to consult with the board of
directors, officers, employees and representatives and agents of the Client at
reasonable times, concerning matters pertaining to the overall business and
financial operations of the Client, as well as the organization of the
administrative staff of the Client, the fiscal policy of the Client, and in
general, concerning any problem of importance concerning the business affairs
of the Client. Consultant may, at the request of the Client, assist in the
preparation of written reports on financial, accounting, or marketing matters,
review final information, analyze markets and report to the Client's Chairman of
the Board of Directors or Chief Executive Officer or President or a Vice-
President or Treasurer on proposed investment opportunities, and develop short
and long term strategic business plans. In addition, Consultant shall provide
liaison services to the Client with respect to the Client's relationships with
unaffiliated third parties. Consultant does not undertake as part of this
Agreement to provide loans, investments or financing for the Client, although
such financial benefits may be made available to Client during the course of
Consultant's engagement. Consultant will not perform any activities that could
subject Consultant or Client to violations of Federal or applicable state
securities law.
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"EXHIBIT B"
Client shall compensate Consultant for its services rendered by Consultant
under this Agreement, as follows:
I. Client shall pay to Jacob International, Inc., One Thousand (1,000) of
the total issued and outstanding common shares of the Client, to be
delivered upon signing, which shares shall, not be registered and will
be subject to provisions of Rule 144, in the name of Jacob
International, Inc. In addition, Jacob has agreed to convert its
$15,325.00 convertible promissory note dated January 3, 2000 into common
stock of Client at the conversion rate of $0.02 US per share, for the
principal sum. It is hereby agreed that the accrued interest on the
convertible promissory note at 12.5% interest (approximately $319.27)
shall be converted into 15,000 shares of the Client's stock ($0.02 US
per share.)
A. UNLESS OTHERWISE STATED ABOVE, THE SHARES TO BE ISSUED HEREUNDER OR TO
BE RECEIVED BY CONSULTANT OR ITS AFFILIATE HEREUNDER SHALL BE SUBJECT TO
RESTRICTIONS AS TO TRANSFER UNDER RULE 144 PROMULGATED BY THE SECURITIES
EXCHANGE COMMISSION ("SEC"). All of the above stock so issued will have
"piggyback registration rights" to be included in any Registration
Statement undertaken by Client, without cost or expense to Consultant.
Upon registration, the shares shall be unrestricted as to
transferability.
B. The parties acknowledge that the recent trading volume is not a fair
indication of value for this transaction based on restricted shares. It
is hereby agreed that the value of the stock for this transaction, based
on the number of shares and recent trading volume is Two Dollars ($2.00)
per share.
C. All transactions shall be denominated in United States Currency.
II. Client shall reimburse Consultant for reasonable "Costs" incurred
or expended for and on behalf of the Client for those costs which the
Client approves in advance. Consultant agrees to maintain written
records of the time and effort, or costs incurred or expended by it on
behalf of Client, which records shall be available to Client upon
request. "Costs" shall include, among those items normally considered to
be "costs", the actual sum or sums paid or incurred by Consultant for or
on behalf of Client for document production, photocopying, facsimile
transmission, long distance telephone, postage, delivery service,
filing fees, publication costs, bond premiums, computer time and
charges, electronic database and communications costs, library charges,
travel and transportation charges. Costs shall be billed at the amount
actually incurred to third party providers, or if the cost is incurred
"in-house", at the usual and regular charges for the service provided
made to other like clients or according to the fee and charge schedule
published or utilized from time to time by the Consultant (which at the
present time is the same as used by third party providers such as
Kinko's or Copy Club.) If the Consultant incurs or expends costs for any
item or items which are or can be used by other clients, Consultant, in
his sole discretion, may make a reasonable allocation of
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such costs incurred or expended and Client agrees to pay such allocated
amount to Consultant.
III. Transaction Compensation. In the course of its services to Client,
Consultant may consult regarding various financial and/or strategic
options for consideration by Client. Such options may include without
limitation, acquisitions, asset sales or purchases, mergers,
consolidations, joint ventures, or other business combinations,
recapitalization, spin-offs, and equity and debt financing through
public offerings, private placements, institutional borrowing, or
otherwise, in each case involving Client and a third party or parties
introduced by Consultant on the other hand ("Transactions"). The
parties agree that the name of the third party or parties introduced by
Consultant hereunder shall be listed by Written Notice from Consultant
and shall be annexed to this Agreement. If Client has prior contact
with the third party, Client shall give Written Notice to Consultant
within One (1) business day setting forth that Client has prior contact
with the named third party and Consultant shall then be entitled to
only such reasonable fee as the Client and Consultant may agree in
writing. Client agrees that Consultant may receive compensation from
the third party in the event of any transaction with the Client;
provided, such compensation shall be disclosed by Consultant to Client
prior to the time of closing.
If one or more Transactions are consummated during the period commencing
on the date hereof and ending two (2) years from the date this Agreement is
terminated, then for each such Transaction, Client shall pay to Consultant the
compensation for Consultant's services for such Transaction(s) (herein referred
to as "Transactional Compensation"), a fee equal to:
i. Ten (10%) percent of the first One Million Dollars and No Cents
($1,000,000.00) of aggregate consideration; and,
ii. Five Percent (5%) of the second One Million Dollars and No Cents
($1,000,000.00) of aggregate consideration; and,
iii. Four Percent (4%) of the third One Million Dollars and No Cents
($1,000,000.00) of aggregate consideration; and,
iv. Three Percent (3%) of the fourth One Million Dollars and No Cents
($1,000,000.00) of aggregate consideration; and,
v. Two Percent (2%) of the fifth One Million Dollars and No Cents
($1,000,000.00) of aggregate consideration; and,
vi. One Percent (1%) of all amounts in excess of Six Million Dollars and No
Cents ($6,000,000.00) of aggregate consideration.
The term "Aggregate Consideration", as used herein, of the Transaction,
payable at the time and from time to time as such consideration is received. For
purposes hereof, aggregate consideration shall mean the total value of all
cash, securities, notes, rights under escrow
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arrangements, and any other consideration paid or payable, directly or
indirectly, in connection with a Transaction, as well as institutional debt for
borrowed money which is being assumed in connection therewith, and without
credit, reduction or set-off for any compensation paid to Consultant by third
parties to the Transaction. If a portion of Consideration includes stock,
debentures, options, warrants, bonds, contingent payments, "Aggregate
Consideration" shall also include One Hundred Percent (100%) of the face value
of such payments, when and if made, in which event that portion of the fee
payable to Consultant hereunder shall be evidenced by an appropriate issuance of
either (a) stock, convertible debenture(s), options or warrants; or (b)
debentures, bonds or promissory note(s) ("Note") secured by the contingent
payment, said Note to be payable to Consultant coincident with payment of such
contingent payments. Should regulatory requirements and/or economic constraints
indicate a lower percentage fee, then Client shall not enter into any financing
arrangement with a party named in the schedule hereto without the prior written
consent of Consultant. If any of the aggregate consideration is to be made in
the form other than cash or good funds, then the Client shall deliver to
Consultant an assignment of a prorata portion of the aggregate consideration in
whichever form such aggregate consideration is to be paid (for example,
$1,000,000 cash and $1,000,000 note will be paid to Consultant as follows:
Total compensation due: 10% of $1,000,000 and 5% of $1,000,000=$150,000.
Cash portion (50% of $150,000)=$75,000
Cash at Closing; Deferred portion (50% of $150,000)=$75,000 Note
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